Audit and Assurance: Fraud Detection Responsibilities and Revenue

This assignment delves into the responsibilities of an external auditor in detecting fraud, emphasizing that the primary role is to analyze financial statements for a true and fair view, rather than focusing solely on fraud detection. It highlights that while auditors must report suspected fraud, it's not their primary responsibility to find it. The assignment further addresses revenue assertion for student fees at UBWS, a private university in Sydney, focusing on ensuring accurate recording and banking of student fees collected each quarter. It emphasizes the importance of effective internal controls to prevent fraud and maintain control over funds and operations, ensuring the integrity of financial reporting. Desklib offers a platform to explore more solved assignments and resources for students.

Running head: AUDIT AND ASSURANCE
Audit and Assurance
Name of the Student:
Name of the University:
Author’s Note:

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AUDIT AND ASSURANCE
Table of Contents
Week 1-4 Bonus Question...............................................................................................................2
Role of External Auditor in Detection of Frauds.............................................................................2
Week 1-6 Bonus Question...............................................................................................................3
Assertion for Student fees Revenue.................................................................................................3
Internal Control................................................................................................................................3
Reference.........................................................................................................................................4

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AUDIT AND ASSURANCE
Week 1-4 Bonus Question
Role of External Auditor in Detection of Frauds
The primary role of an auditor is to analyze the financial statement of a company with a
view to make an opinion whether the financial statements of the company are showing true and
fair view or not. The opinion of the auditor is very important in order to justify whether the
financial statements of the company are fairly represented or not. In addition to this, for most of
the companies, auditing of a financial statements is mandatory for ensuring that all the financial
data is fairly reported and the financial position of the business is effectively shown (Petraşcu
and Tieanu 2014). Most of the companies wrongly believe that the primary responsibility of the
auditor is to detect any frauds which make have taken place but it is not the case.
The primary focus of an auditor is to investigate the financial reports of the company and
form an opinion on the same on the basis of which an audit report is prepared. The report states
the findings of the auditor during the course of the audit and also states his opinion whether the
financial statements are showing true and fair view or not (Sharma and Panigrahi 2013). The
auditor needs to ensure that all the legal requirements, accounting principles and relevant
standards are adhered to while preparing the final accountings of the business. However, if
during the course of audit, the auditor discovers a situation where fraud might have taken place
than the auditor needs to inform the management of the company of such a situation (Leung et
al. 2014). The auditor cannot overlook such an incident but this does not mean that the
management should expect detection of frauds from the auditor as their primary responsibility.

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AUDIT AND ASSURANCE
Week 1-6 Bonus Question
Assertion for Student fees Revenue
As per the case study which is shown in the assessment shows that UBWS is a privately-
owned institute which operates in Sydney and the institute provide educational services for
which it charges a fee of $ 20,000 which is to be paid at the beginning of each quarter. The chief
financial officer (CFO) needs to ensure the total collection of revenues which comes from the
fees of the students and ensure that the amount which is collected are appropriate as per the
expectation of the management. The institute needs to ensure that the amount which is collected
from each student during each quarter must be effectively recorded with proper receipts.
Internal Control
The internal control of the institute also plays a vital role in the effective management of
the of the institute. The management needs to ensure that effective internal control is established
so that the revenues which are collected can be recorded effectively and the same can be banked
for management of the funds (Skaife, Veenman and Wangerin 2013). An effective internal
control in a business ensures that no incidence of frauds takes place and proper control over the
funds and operations are maintained by the management.

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AUDIT AND ASSURANCE
Reference
Leung, P., Coram, P., Cooper, B.J. and Richardson, P., 2014. Modern Auditing and Assurance
Services 6e. Wiley.
Petraşcu, D. and Tieanu, A., 2014. The role of internal audit in fraud prevention and
detection. Procedia Economics and Finance, 16, pp.489-497.
Sharma, A. and Panigrahi, P.K., 2013. A review of financial accounting fraud detection based on
data mining techniques. arXiv preprint arXiv:1309.3944.
Skaife, H.A., Veenman, D. and Wangerin, D., 2013. Internal control over financial reporting and
managerial rent extraction: Evidence from the profitability of insider trading. Journal of
Accounting and Economics, 55(1), pp.91-110.