ACC3510 Auditing: Fraud, Risk, and Audit Procedures at BC Iron Limited

This case study examines the auditing practices and potential fraud risks at BC Iron Limited, a mining company. It applies a risk-based auditing approach, referencing ASA 200 and ASA 240 standards, to identify and address areas of concern such as fraud, aggressive accounting policies, and misappropriations. The study analyzes the company's specific risks, including company-specific and market risks, and proposes methods for fraud detection and prevention, such as continuous monitoring of financial reports and ethical practices. The report concludes with recommendations for improving audit practices and ensuring transparency in financial reporting. Desklib provides access to this and other solved assignments for students.

Auditing Theory and Practice

Introduction
 Fraud, aggressive policies and other misappropriations
 BC Iron Limited is a smaller mining company where they manage
operations such as mining, crushing as well as screening and trucking
 The Auditing Standard used in this study is ASA 200 and 240 as it
discuss about fraud detection and how to minimize it as far as
possible. Risk-based approach had been used in the study where risk
need to be appropriately identified as well as managed.

Fraud
 Fraud can be defined as a the intentional false representation or
concealment of a material fact so that the company show wring
misappropriations and hide facts from the auditors.

Auditor responsibilities
 Auditing procedures for Fraud detection
 Auditing procedures for aggressive accounting policies
 Auditing procedures for any other misappropriations
 Plan and perform the audit for obtaining reasonable assurance
whether the financial statements are free of material misstated or
caused by any other error or fraud
 Prepares and examines the financial records
 They assess financial operations as well as work to make sure that
the business is running in an effective way.

Auditing procedures for Fraud
detection
 In accordance with ASA240, the main objective of an auditor
is to evaluate as well as assess the risk associated from material
misstated figures present in the financial report because of any types
of fraud (Rosenberger and Lachin 2015). In order to assess sufficient
audit evidence on matters relating to assessed risks, it is needed for
an auditor to design and implement suitable responses. Furthermore,
the auditor need to respond appropriately to fraud or suspected fraud
at the time of audit practices.

Auditing procedures for aggressive accounting
policies
 Most of the Business Corporation involves in conducting tax
transparency measures into their Corporate Social Responsibility
agenda that get along with other relatable charitable activities as well
as affirmative action employment policies and other environmental
initiatives (Power and Gendron 2015). In order to prevent risk,
company need to transfer payments as well as create document that
explain how it is arrived at particular market value. In order to deal
that, company need to conduct an economic analysis of its industry
as well as aim at offering market research data in displaying the fact
that price is justified. Therefore, market research firms need to work
upon creation of compliance tax planning strategies in order to
reduce money owning (Alles, Kogan and Vasarhelyi 2018).

Auditing procedures for any other
misappropriations
 In accordance to International Standard on Auditing 240, the main
objective of an auditor is to evaluate as well as assess risk occurred
from material misstated figures present in the financial statements
because of fraudulent activities (Lin et al. 2015).

what type of fraud occur in BC iron
according to the report
 On analysis, it is found out that the shareholders of BC Iron Limited and even the
potential investors understand about the risk involved in the stock and the features
that can affect the portfolio. It is necessary for an investor to deal with two types of
risk that affect market value of BC Iron Limited (Hargie 2016).
 To analyze both the risks, the first risk is company specific that has the potential to
get diversified away and this can be done by investing in other company for lowering
exposure to one specific stock.
 On the other hand, the other risk that needs proper attention on market risk that
cannot be diversified and lead to consider macroeconomic factors that affects overall
stock in the marketplace (Amir-Mohammadian, Chong and Skalka 2016). There are
various features of stock expose to different levels of market risk. In that, commonly
used metric will be used to measure the market risk and even the broad market
index as it shows beta value for the same.
 Furthermore, any stock with a greater than one is treated more volatile by nature as
compared to beta that is less volatile at the same time (Harding et al. 2016).

How the fraud can be fixed
 Constant monitoring of financial report of any company will lead to
find ways on how to reduce fraud in the upcoming financial years
 Auditor should engage in identifying fraudulent activities as taken
place at BC Iron Limited.
 The fraud can be detected by monitoring the financial statement of
BC Iron Limited
 If there is any sudden increase or decrease percentage present during
3 financial years, there is always a doubt of fraud practices or
misappropriation of figures.

Conclusion and recommendations
 It is recommended that companies should engage in ethical practices
so that they face no issue at the time of audit activities. The
management should not hide any important information from the
auditors as the company can face consequences in the future.

References and Bibliography
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