Targeted fraud risk assessment is consistent with the PCAOB's Auditing Standard No. 5 AS5 which:
A) requires a top down approach.
B) requires the audit team to hold a brainstorming session at the beginning of each investigation to determine who has the ability to commit the potential fraud.
C) requires the board of directors to review the internal controls of the entity when fraud of a material amount is detected.
D) requires the audit committee report directly to the independent auditor.

Question

Quizplus · Accepted Answer

PCAOB's Auditing Standard No. 5 AS5 requires a top down approach, which means starting from understanding the overall risk environment of the entity and then focusing on specific fraud risks that may exist. It does not require a brainstorming session to identify potential fraudsters or involve the board of directors in the review of internal controls when fraud is detected. It also does not require the audit committee to report directly to the independent auditor.

Targeted Fraud Risk Assessment Is Consistent with the PCAOB's Auditing