Abstract
Fraud is an intentional act that results in a material misstatement in financial statements that are the subject of an audit. The risk of material misstatement refers to the risk that the financial statements are materially misstated and do not present true and fair view. Material misstatements relate to the information included in the financial statements. Material misstatements are such omissions and misstatements of financial information included in the financial statements that can affect the economic decisions of the users of financial statements. In an audit of financial statements, detection risk is the risk that the procedures performed by the auditor will not detect a misstatement that exists and that could be material, individually or in combination with other misstatements.
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Notes
- 1.
American Institute of Certified Public Accountants.
- 2.
Where responses to inquiries of management or those charged with governance are inconsistent, the auditor shall investigate the inconsistencies (ISA 240 para. 14).
- 3.
Even though the audit is properly planned and performed in accordance with the ISA’s ISA 200, “Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with International Standards on Auditing” para. A51.
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Velentzas, J., Broni, G., Kartalis, N. (2017). Deterrence, Detection, and Investigation of Economic Fraud and Auditor’s Responsibilities Relating to Audit of Financial Statements According to International Standards. In: Tsounis, N., Vlachvei, A. (eds) Advances in Applied Economic Research. Springer Proceedings in Business and Economics. Springer, Cham. https://doi.org/10.1007/978-3-319-48454-9_49
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