The Auditor’s Responsibility to Consider Fraud and Error in an Audit of Financial Statements.

2148 WordsAug 20, 20119 Pages
The Auditor’s Responsibility to Consider Fraud and Error in an Audit of Financial Statements. The Accounting and Auditing Organization for Islamic Financial Institutions established on Safar 1, 1410 Hijri (February 26, 1990) at Algiers and registered in Bahrain on Ramadan 11, 1411 Hijri (March 27, 1991) has so far (April, 2004) set the following Financial Accounting Standards, Auditing Standards, Governance Standards & Code of Ethics for Accountants & Auditors of Islamic Financial Institutions: □ Financial Accounting Standard: FAS Number Title 1. General Presentation and Disclosure in the Financial Statements of Islamic Banks and Financial Institututions 2. Murabaha and Murabaha to the Purchase Orderer 3. Mudaraba Financing…show more content…
Definition and cases of fraud 5. Fraud refers to an intentional act by one or more individuals among management, those charged with governance, employees, or third parties, involving the use of deception to obtain an unjust or illegal advantage, such as: (a) Breach of contracts between the IFI, investors and other third parties such as the misappropriation of funds of investment account holders in the case of Islamic Banks, and policyholders in the case of Islamic Insurance companies (referred to hereafter as IAH and PA, respectively); (b) Intentional misallocation of profits between the IFI and IAH/PA; (c) IFI’s misuse of IAH and PA funds including violation of contracts; (d) Intentional non disclosure by management of some activities and relevant information to the IFI’s Shari’a supervisory board, auditors, investors and shareholders; (e) Intentional, consistent violation and misinterpretation of AAOIFI Shari’a standards and the
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