Explain how to detect when an act or acts of fraud occurred...

Name: explain how to detect when an act or acts of fraud occurred include the following explain how internal and external controls play a role in detecting fraudexplain how the use of computer aid 84387
Uploaded: 2024-08-06T15:53:51-08:00
Duration: 1 min 40 s
Channel: Breanna Ollech
Description: explain how to detect when an act or acts of fraud occurred include the following explain how internal and external controls play a role in detecting fraudexplain how the use of computer aid 84387

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As we gear up for the annual external audit at K&M Industries, it's crucial to ensure that our accounting team is well-prepared to demonstrate the effectiveness of our internal controls. Internal controls play a vital role in safeguarding company assets, ensuring financial accuracy, and complying with regulatory requirements. For this discussion, I want you to focus on one of the procedures for testing internal controls: 1. Inquiry: This involves obtaining information and explanations from personnel responsible for executing control activities. It helps auditors understand how controls are designed and implemented and identify any potential weaknesses or gaps. 2. Observation: Auditors directly observe control activities being performed by employees to assess their effectiveness and adherence to established procedures. This provides firsthand insight into the operation of controls and helps identify any deviations from expected practices. 3. Inspection of Physical Evidence: Auditors examine physical evidence such as documents, records, or assets to verify the existence and accuracy of transactions and ensure compliance with control procedures. This helps confirm the integrity of data and the reliability of control activities. 4. Reperformance: Auditors independently execute control procedures to validate their effectiveness and accuracy. By reperforming control activities, auditors can assess whether controls operate as intended and produce the desired outcomes consistently. 5. Test of Software Controls: This involves evaluating the effectiveness of automated controls embedded within software systems. Auditors assess the design and functionality of software controls to ensure they adequately mitigate risks and maintain data integrity. Questions: 1. Choose one of these procedures and discuss its significance in testing internal controls. 2. How does the selected procedure help auditors assess the strength and reliability of internal controls? 3. Share examples or insights to illustrate your points.

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As an internal auditor for the state auditor's office, you are assigned to review the implementation of a new computer system in the state welfare agency. The agency is installing an online computer system to maintain the state's database of welfare recipients. Under the old system, applicants for welfare assistance completed a form giving their name, address, and other personal data, plus details about their income, assets, dependents, and other data needed to establish eligibility. The data is checked by welfare examiners to verify their authenticity, certify the applicant's eligibility for assistance, and determine the form and amount of aid. Under the new system, welfare applicants enter data on the agency's website or give their data to clerks, who enter it using online terminals. Each applicant record has a "pending" status until a welfare examiner can verify the authenticity of the data used to determine eligibility. When the verification is completed, the examiner changes the status code to "approved," and the system calculates the aid amount. Periodically, recipient circumstances (income, assets, dependents, etc.) change, and the database is updated. Examiners enter these changes as soon as their accuracy is verified, and the system recalculates the recipient's new welfare benefit. At the end of each month, payments are electronically deposited into the recipient's bank accounts. Welfare assistance amounts to several hundred million dollars annually. You are concerned about the possibilities of fraud and abuse. a. Describe how to employ concurrent audit techniques to reduce the risks of fraud and abuse. b. Describe how to use computer audit software to review the work welfare examiners do to verify applicant eligibility data. Assume that the state auditor's office has access to other state and local government agency databases.

Jennifer S.

Explain what is meant by auditing around the computer, and describe what must be present for this approach to be effective in the audit of a client that uses IT to process accounting information.

Sanjit V.

Transcript

00:01 One procedure is observation, and this is significant because it allows auditors to directly witness the execution of the control activities.

00:14 The first -hand insight helps auditors understand how they are applied in real time and whether the employers adhere to the established procedures.

00:25 How it helps them access these strengths.

00:27 By observing these, auditors can assess the effectiveness and consistency of these controls to see if employees are following them correctly and if they are applied as intended.

00:44 For examples, an auditor could observe the cash handling process at a retail store, and they can notice that the employees are not consistently counting cash at the end of each shift...

Question

Explain how to detect when an act or acts of fraud occurred. Include the following: Explain how internal and external controls play a role in detecting fraud.Explain how the use of computer-aided auditing techniques (CAAT) plays a role in detecting fraud.

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