Auditing: A Risk Based-Approach to Conducting a Quality Audit
Auditing: A Risk Based-Approach to Conducting a Quality Audit
10th Edition
ISBN: 9781305080577
Author: Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher: South-Western College Pub
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Chapter 2, Problem 39RSCQ

Many consider the Enron fraud to be one of the most significant frauds of the early 2000s.

a. Describe the various failures and environmental characteristics during this rime that enabled the Enron fraud to happen.
b. What elements of the fraud triangle seem most relevant to the Enron fraud?

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If one of the three elements of the fraud triangle is not present, can fraud still be perpetrated? Explain. Identify factors (red flags) that would be strong indicators of opportunities to commit fraud. Is the ability to rationalize the fraud an important aspect to consider when analyzing a potentially fraudulent situation? What are some of the common rationalizations used by fraud perpetrators? Define and illustrate kiting. What controls should the client institute to prevent it?
In writing your response, the following points must be addressed fully:a) Determine the type of fraud committed and describe with examples thesymptoms of fraud that are evident in the case study.b) As discussed in units 1 to 4, all frauds involve key elements. Identify anddescribe, using examples, the elements of the Purell’s magazine fraud.c) What role did trust play in allowing this fraudulent scheme to transpire?What elements contributed to this trust? Outline two positive and twonegative consequences that this might pose to the company in future fraudprevention.d) Describe Purell Magazine and Publishing House fraud preventionprogramme and identify any improvements that might be necessary toprevent this type of fraud or at least discover it sooner.
Fraud risk factors are events or conditions that indicate which of the following?a. An opportunity to carry out a fraud.b. An attitude or rationalization that justifies a fraudulent action.c. An incentive or pressure to perpetrate fraud.d. All of these are correct.
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