Question

Which of the following actions by the company auditor increases the potential to detect fraud?

1) comparing current procedure test results to a prior year
2) performing new procedures not conducted in prior years
3) assigning the same audit staff to the audit from year to year
4) carefully checking the audit test results

Answer 1

To enhance fraud detection, an auditor can compare current to prior year results, introduce new audit procedures, rotate audit staff, and carefully check audit test results.

Step-by-step explanation:

To increase the potential to detect fraud in an audit, several actions can be taken by the company auditor. Comparing current procedure test results to a prior year can help identify inconsistencies or changes in patterns that may indicate fraud. Performing new procedures not conducted in prior years introduces unexpected checks that can uncover fraudulent activities that might have been missed by the usual audit procedures. Regularly rotating audit staff can provide fresh perspectives and can prevent auditors from becoming too familiar with the staff and processes, which might lead to complacency. Lastly, carefully checking the audit test results is essential to ensure that the audit is thorough and that any anomalies are investigated. Each of these actions can play a role in enhancing the detection of fraudulent activities.