Table of contents

1. Introduction to Accounting1h 21m
2. Transaction Analysis1h 13m
3. Accrual Accounting Concepts2h 38m
4. Merchandising Operations2h 30m
5. Inventory1h 55m
6. Internal Controls and Reporting Cash1h 16m
7. Receivables and Investments3h 8m
8. Long Lived Assets5h 1m
9. Current Liabilities2h 19m
10. Time Value of Money1h 23m
- Time Value of Money Equations
  35m
- Using Time Value of Money Tables
  47m
11. Long Term Liabilities2h 45m
12. Stockholders' Equity2h 15m
13. Statement of Cash Flows2h 24m
14. Financial Statement Analysis5h 25m
15. GAAP vs IFRS56m

6. Internal Controls and Reporting Cash

Fraud and the Fraud Triangle

Financial Accounting

6. Internal Controls and Reporting Cash

Fraud and the Fraud Triangle

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Multiple Choice

Audit standards require auditors to perform which of the following due diligence procedures prior to accepting or continuing with a client?

Evaluate management's integrity and ethical values

Test internal controls over financial reporting

Assess the risk of material misstatement due to fraud

Obtain a written representation from the client

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Verified step by step guidance

Understand the context of audit standards: Audit standards are guidelines that auditors must follow to ensure the quality and reliability of their work. These standards emphasize due diligence procedures to assess the suitability of a client before accepting or continuing an engagement.

Step 1: Evaluate management's integrity and ethical values. This involves assessing whether the client's management demonstrates honesty, transparency, and adherence to ethical practices. Auditors may review past actions, communication, and the organization's culture to form this evaluation.

Step 2: Test internal controls over financial reporting. Auditors examine the systems and processes in place to ensure accurate and reliable financial reporting. This includes identifying weaknesses or gaps in controls that could lead to errors or fraud.

Step 3: Assess the risk of material misstatement due to fraud. Auditors analyze the likelihood of significant errors or fraudulent activities in the financial statements. This involves understanding the client's industry, financial pressures, and any red flags that may indicate fraud risk.

Step 4: Obtain a written representation from the client. Auditors request a formal written statement from the client confirming the accuracy of the financial information provided and their compliance with relevant laws and regulations. This representation serves as evidence in the audit process.