Distinguish between fraudulent financial reporting and misappropriation of assets.

Contemporary Auditing
11th Edition
ISBN:9781337650380
Author:KNAPP
Publisher:KNAPP
Chapter1: Comprehensive Cases
Section1.4: Health Management, Inc.
Problem 7Q
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Auditors should plan and perform their audits to provide reasonable assurance of detecting material misstatements in financial statements, including those resulting from fraud

a.Distinguish between fraudulent financial reporting and misappropriation of assets.

b. Describe the three fundamental conditions necessary for the commission of fraud. Provide an illustration of these three conditions for a case of fraudulent financial reporting.

c. Describe the three ways in which the auditors may respond to fraud risks in an audit.

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