Video: Fraud & General Risk at All Levels Objectives

In this lesson, Nick Palazzolo, CPA, discusses the assessment of material statement risk in an entity's financial statements due to fraud or errors. He introduces the concept of a fraud brainstorming session and explains its importance during the planning phase for engagement teams. The lesson also covers the identification and documentation of risks and their potential impacts, as well as related controls at the relevant assertion level for significant classes of transactions, account balances, and disclosures. Additionally, Nick delves into situations indicative of fraud, including misappropriation of assets and fraudulent financial statements, providing a comprehensive understanding of the topic.

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Video Transcript

Instructor: Nick Palazzolo

Nick Palazzolo is head instructor of ExamPrep.ai CPA Review. Nick's teaching style is engaging & upbeat, combining practical Big 4 tax & assurance expertise with years of 1-on-1 coaching. His lessons are concise and emphasize what you need to know to pass. Whether you're a recent grad or working full-time, we’re confident you can conquer your CPA exams with Nick’s review.

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Now, first off, we're going to want to assess the risk of material statement of an entity's financial statements due to fraud or error. Now, we did that, obviously, last time in our audit risk. But we're going to talk about the concept of a fraud brainstorming session. This is going to be something that happens during the planning phase. And we're going to talk about leveraging the combined knowledge and experience and understanding from the engagement team as a whole. We also want to identify and document the assessed impact of risks on material statement at the financial statement level, taking into account the effect of relevant controls. And lastly, we want to identify and document risks and their potential impacts, as well as related controls at the relevant assertion level for significant classes of transactions, account balances, and disclosures. Maybe another phrase, string of words you've seen is transactions, account balances, disclosures. We see that in relation to assertions as well. Just taking a pause to just kind of address that. Transactions relating to, OK, we have revenues coming in, debits and credits, account balances, point in time, balance sheet, and then disclosures, notes to the financial statements, all of those. This is what we're going to see. This is what we're going to dive into. We've got a nice grab bag. We've got situations as well that are going to be indicative of fraud. We're going to deal with misappropriation of assets, fraudulent financial statements. Obviously, all very important and fun topics. So with that being said, let's dive right in and have a good time going through the material.

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Identify Risk During Planning

Module: 5 Concepts, 62 Videos

Fraud & General Risk at All Levels Overview

0:22

Fraud & General Risk at All Levels Objectives

1:19

Introduction to Fraud and General Risk at All Levels

2:04

The Fraud Triangle