Auditing and Assurance Services 1st Edition by Iris Stuart

تمرين 9

WorldCom
The WorldCom fraud described in the chapter involved a simple earnings manipulation through which the company capitalized expenses to increase net income. This transaction was recorded by a journal entry to debit capital assets and credit expenses.
a. Describe the substantive audit procedures that an auditor could use to determine whether financial statements are misstated by capitalizing expenses.
b. Identify analytical procedures that could have helped the auditor identify the risk of fraud at WorldCom.