Acca aaa s21 Notes

4.3. Alleged bribery payments for new sales contracts
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Interview the suspects if possible (eg they may still be employed pending the outcome of the 
investigation). Ask, for example, how their job role gives them access to cash and the 
accounting systems.
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Review payments to new customers during the year (may be able to use CAATs here).
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Review terms of contracts with new customers. Are there legitimate grounds for ‘incentives’?
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Review email correspondence between the suspects and new clients (may need to use data 
analytics for this).
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Perform tests of controls on the authorisation of payments. Who else might have known about 
them?
September 2021 to June 2022 exams
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5. Main differences between a financial statement audit and a 
forensic audit
Financial statement 
audit
Forensic audit
Skills needed
Ordinary audit skills
Specialist eg how to question witnesses 
and suspects.
Predictability
Regular, planned
Often unexpected and urgent, therefore 
there might be problems finding the 
appropriate staff resources: number of 
staff and possessing the required skills 
and experience
Materiality
Not particularly interested 
in immaterial errors
Many frauds are committed by stealing 
small amounts frequently. For example, if 
a fraudster knows that payments under 
$100 are not subject to approval by a 
manager, small frauds of about $90 might 
be used.
Computer-assisted audit 
techniques
Used for selecting/finding 
samples and for testing 
internal controls.
Can be used to examine 100% of 
transactions and this might be needed 
when materiality is of no importance. For 
example, all payments from the bank 
could be examined in the search for a 
specified recipient’s account number
Work to be performed and 
for whom
Broadly standard (though 
differs in detail from audit 
to audit) and specified by 
the law and by auditing 
standards. Fairly standard 
engagement letter.
Auditor's reports are for 
the shareholders. Letters 
setting out control 
weaknesses go to those 
charged with governance.
Open-ended, non-standard. Therefore, 
must be carefully agreed in advance with 
the client and an engagement letter 
issued and agreed.
May need to comply with legal rules on 
the collection and presentation of 
evidence in a court of law.
Generally carried out at the request of 
management but it could be at the 
request of an insurance company, a legal 
firm or the authorities.
Interviews
Client staff are routinely 
interviewed about how 
transactions are 
performed, what a 
transaction is, what 
controls are present etc. 
Client staff might additionally be 
interviewed if they are suspected of 
carrying out a fraud. This requires skill and 
care. The staff member might be entitled 
to have legal representation and if this is 
not provided the interview transcripts 
might not be accepted as evidence.