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TERRA ECONOMICUS

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  • 2013
  • No 2.3
  • The methodological approach to the combined estimation of falsification risk due to fraud in an audit of financial statements

The methodological approach to the combined estimation of falsification risk due to fraud in an audit of financial statements

TERRA ECONOMICUS, , Vol. 11 (no. 2.3),
p. 57-62

The advantages of a risk-based approach to auditing financial statements are described. Historical and economic conditions to using its in modern audit practice are systematized. Articulated frameworks to limit the construction of models of integrated assessment of the risks of material misstatement of financial statements are formulated. Author’s model of the process of risk assessment in the audit considering of limitations is proposed. The article contains: the rationale for developing a model of combined risk assessment in the audit, a description of the methodological foundations of the process of its combined evaluation, description of the methodological tools and approach to their application to the example of procedures for assessing risks of material misstatement of accounting (financial) statements due to fraud. The structuring of a combination of fraud factors on based of «fraud triangle» is proposed. The possibilities of practical application of the proposed methodology on the example of a comprehensive procedure to identify risk of distortion of financial statements due to fraud are demonstrated.


Keywords: audit; method of risk estimator; the matrix model of structuring risk; the fraud risk; the essential distortion of financial statements

References:
  • Arzhenovskiy S.V., Bahteev A.V. (2012). The conceptual approach to integrated risk assessment in the audit. Proceedings of the I International scientific-practical conference. Rostov-on-Don: RSEU. Part 2. pp. 7–12. (In Russian.)
  • The Federal Law «On Accounting» from 06.12.2011 No. 402 (ed. 23.07.2013).
  • Federal Auditing Standard «Modified opinion in the audit report» (FAD 2/2010). Approved by order of Ministry of Finance from 20.05.2010 No. 46н.
  • Federal Auditing Standard «Duties of the auditors of consideration of fraud in an audit» (FAD 5/2010). Approved by order of Ministry of Finance from 17.08.2010 No. 90н (ed. 16.08.2011). (In Russian.)
  • Federal Auditing Standard «Duties of the auditors of the compliance requirements of the entity regulations in an audit» (FAD 6/2010). Approved by order of Ministry of Finance from 17.08.2010 No. 90н (ed. 16.08.2011). (In Russian.)
  • Federal Auditing Standard «Understanding of the entity, the environment in which it operates, and the assessment of risks of material misstatement of the audited financial statements (accounts)» (FAD 6/2010). Approved by Government of RF from 23.09.2002 № 696 (ed. 27.01.2011). (In Russian.)
  • Quick Guide to the standards and norms of audit (1992). Roy Dodge. Moscow: Finance and Statistics. (In Russian.)
Publisher: Southern Federal University
Founder: Southern Federal University
ISSN: 2073-6606