Auditing Red Flags

Upon successful completion of this course, participants will be able to:

• Recognize the nature of professional skepticism.
• Recall the reasons for evaluating combinations of red flags.
• Recognize the effect of a red flag on audit timing.
• Specify the types of asset misappropriations.
• Recall why corruption can be difficult to detect.
• Recognize the elements of the fraud diamond.
• Recall why weak custody controls are important for the auditor.
• Recognize the governance conditions that can be considered red flags.
• Specify the importance of an inadequate internal audit function.
• Recall why having no whistleblower complaints can be a problem.
• Recognize the risks associated with rapid growth.
• Recall why structural complexity increases audit risk.
• Recognize why complex structures are concerning for the auditor.
• Specify why industry instability is relevant to red flag analysis.
• Recall why contract analysis is needed when auditing revenue.
• Recognize which audit techniques to apply when fictitious sales are suspected.
• Recall the the situations suggesting a problem with receivable collectability.
• Recognize why round-dollar entries deserve extra audit scrutiny.
• Specify the circumstances in which auditors inspect subsequent shipment evidence.
• Recall the events that raise doubts about year-end sales.
• Recognize why delayed deposits are a red flag.
• Recall why auditors should examine repeated transfers through multiple bank accounts.
• Recognize why manual cash journal entries can be concerning.
• Specify why vague reconciling items in bank reconciliations need to be investigated.
• Recall the behavior associated with anchoring bias.
• Recognize why red flag documentation is needed.
• Recall why follow-up procedures should be linked to specific red flags.
• Recognize the auditor communications used when fraud may involve senior management.
• Specify the types of forensic procedures used by auditors.
• Recall how data analytics can be used to investigate red flag situations.
• Recognize why continuous improvement is needed in audits.
• Recall the red flags associated with specific industries.