This problem requires you to access PCAOB Auditing Standards to answer each of the following questions. You can access those standards by viewing content found under the link “Standards.” Review PCAOB auditing standards related to the auditor’s consideration of fraud in a financial statement audit
(AS 2401) and related to the auditor’s responses to the risks of material misstatement (AS 2301) to answer parts a. through f. below. For each answer, document the paragraph(s) in the relevant standard supporting your answer.
a. You have determined that there is a fraud risk related to the existence and accuracy of inventory. Review the guidance in PCAOB auditing standards to provide examples of
auditor responses involving changes to the nature, timing, and extent of audit proce-
dures related to this assessed fraud risk for inventory.
b. What do PCAOB auditing standards say about how the auditor should assess risk re-
lated to revenue recognition?
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Required
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Based on AICPA question paper, American Institute of Certified Public Accountants.
Chapter 10 / ASSESSING AND RESPONDING TO FRAUD RISKS 339
c. What examples of auditor responses to fraud risk related to revenue recognition are
provided in PCAOB auditing standards?
d. What kind of documentation is required for the auditor’s consideration of fraud?
e. What kinds of inquiries about fraud risks are required by PCAOB AS 2301?
f. How does PCAOB AS 2301 define “fraud risk factors”? Do all conditions have to be
present for fraud risk to exist
