Risk of Fraudulent Reporting

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Address  Risk  of  Fraudulent  Reporting

  • review approval authority for entering into significant transactions;
  • assess the risk of fraudulent financial reporting by inquiring about common red flags against best practices, including the following:

- cash flow problems;

- requests to change the external auditors;

- large or unusual transactions at or near year end;

- material transactions with related parties;

- off balance sheet transactions involving special purpose entities;

- overly complex transactions which suggest form over substance;

- missing records of the company;

- side arrangements;

- unusual variances in the company’s financial results;

- significant changes in income tax rates;

- warnings or complaints from employees;

- sudden turnover in key management positions;

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