Sas 99 Free Essays

The new fraud standard, Statement on Auditing Standards no. 99,  Consideration of Fraud in a Financial Statement Audit,  is the cornerstone of the AICPA’s comprehensive antifraud and corporate responsibility program. The goal of the program is to rebuild the confidence of investors in our capital markets and reestablish audited financial statements as a clear picture window into corporate America. We will write a custom essay sample on Sas 99 or any similar topic only for you Order Now SAS No. 99 requires you to gather and consider a great deal of information to assess fraud risks. SAS 99 defines fraud as an intentional act that results in a material misstatement in financial statements.An audit requires due professional care, which in turn requires that the auditor exercise professional skepticism. Requires ‘brainstorming’ sessions to discuss how and where the entity’s financial statements might be susceptible to material misstatement due to fraud. The first objective is so the engagement team will have an opportunity for the seasoned team members to share their experiences with the client and how a fraud might be perpetrated and concealed. The second objective is to set the proper â€Å"tone at the top† for conducting the engagement.The brainstorming session is to be conducted in a manner that models the proper degree of professional skepticism and sets the culture for the entire audit. Requires the auditor to gather information necessary to identify risks of material misstatement due to fraud by the following * Making inquiries of management and others within the entity * Considering the results of analytical procedures performed in planning the audit. * Considering fraud risk factors. * Considering certain other informationSAS 99 requires auditors to ask management questions and make a decision as to whether they need to ‘educate’ management about fraud and the types of controls. The standard also requires auditors to make inquiries of the audit committee, internal audit personnel and others within the entity. Requires the auditor to use the information gathered to identify risks that may result in a material misstatement. provides guidance and support on how to identify and assess risks. It challenges auditors to change the way they think about assessing fraud risks.Auditors should identify risks and synthesize how those risks could lead to a material misstatement. This section specifically requires that improper revenue recognition and management override of controls be considered. Requires the auditor to evaluate the entity’s programs and controls that address the identified risks of material misstatement. SAS 99 provides specific examples of programs and controls for both large and small businesses. The auditor should consider which controls mitigate the identified fraud risks. Examination of journal entries and other adjustments. Surprise inventory counts. Contract confirmations. Requires the auditor to assess the risks of material misstatement due to fraud and to evaluate the completion of the audit whether the accumulated results of auditing procedures and other observations affect assessment. The standard provides examples of conditions that may be identified during the audit that might indicate fraud. The auditors must determine whether the results of their tests affect their assessment. Provides guidance regarding the auditor’s communications about fraud to management, the audit committee, and others. The standard requires that any evidence that fraud may exist must be communicated to management and others.The level of severity is insignificant. Describes documentation requirements. Auditors must document: (1) how and when the brainstorming session occurred and who participated, (2) procedures performed to obtain information to identify and assess fraud risk, (3) specific risks of material misstatement due to fraud and the auditor’s response to those risks, (4) results of the procedures performed to address the risk of management override of controls, (5) conditions and analytical relationships that led to additional  audit procedures  or other responses, and (6) nature of communications about fraud made to management and others. How to cite Sas 99, Papers