Fraud Triangle and Auditing - Essay Example

The deputy procurement officer of the firm had a financial crisis, and her spouse had been arrested and arraigned in court. He was fined $ 55,000. She could not raise that amount, and the firm could not lend her anymore because she had reached the maximum lending for that year. She used her position to fraud the consultancy. Colluding with a brick supplier they defraud the firm a total of $ 100,000. Construction of the houses was halted due to insufficient funds this was five months after the fraud had taken place. The Chief Executive Officer of the firm instructed an auditor to examine what had happened. In his report, he suggested $ 150,000 had been spent and could not be accounted for. An organization should always try to assess the state of its employees who have influential power and monitor their acts (Frederickson, n.d). Domestic problems are hard to control if one has a chance to fraud the organization. For the firm to stop future frauds of this form it should ensure construction materials are delivered, the foreman signs, and a copy sent to the finance director.

Question 2
Inherent risks refer to those risks that can result in the misstatement of the audit if there is no any control at all. On the other hand control risks refer to those risks that cannot be mitigated by the current internal control and would result in the misstatement of the audit. As an auditor, it is expected of you to hand in a non-biased and sound report. According to Hindson (2011), assessing the inherent risks for the organization will help an auditor have an overview of the anticipated risks in his auditing. The risks are narrowed down when he identifies control risks. The control risks make the auditor aware of the contentious areas where risks are likely to occur and go unnoticed (Tursi, 1989). Read More