Examples Of Situations That Indicate The Possibility Of Cheating ;

Below are examples of situations that indicate the possibility that financial statements may contain “significant inaccuracies” caused by cheating.

Inconsistencies in accounting records, for example:

Transactions that are not recorded in full or on time, or transactions that are recorded in a format that is not appropriate for the amount, accounting period, classification, or business policy.
Balance or transactions that are not based on documents or are not approved.
Last-minute fixes that significantly affect financial results.
Finding evidence that employees have accessed the system and records in a way that does not comply with the authority required to perform their duties.
Tips or complaints made to the auditor about the alleged fraud.
Conflicting or incomplete evidence, e.g.:

The missing documents.
Documents that appear to have been modified.
Although the originals are expected to be found, there are no actual copies of the relevant documents, except for photocopies or those transmitted electronically.
Unexplained significant differences that arise in reconciliation transactions.
Unusual changes in the balance sheet or changes in trends or significant rates or relationships of financial statements-for example, accounts receivable growth faster than revenue.
Inconsistent, ambiguous or unreasonable information or answers obtained as a result of business management and employee interrogations and analytical procedures.
Finding unusual discrepancies between business records and responses to confirmations.
Accounts receivable account has a large number of accounts receivable or correction records.
The presence of undisclosed or poorly described differences between the accounts receivable account assistant Book and the control account, or between the customer account summaries and the accounts receivable account assistant Book.
Losses or deficiencies are found between canceled checks that are normally sent back to the business along with a bank statement.
Significant deficiencies in stock or physical assets.
Electronic evidence inconsistent, non-existent or incomplete with the enterprise's record-keeping practices or policies.
Fewer or more responses to confirmation letters than expected.
Failure to obtain evidence of the development of key systems and testing of program changes, as well as the activities of system installation and implementation of changes related to the current year.
Problematic or unusual relationships between the auditor and management, for example:

Failure to allow the auditor access to records, facilities, specific employees, customers, vendors, or other persons and resources for which audit evidence may be obtained.
Excessive time pressure placed on the auditor by management to resolve complex or controversial issues.
Complaints from management regarding the conduct of the audit or intimidation of management's audit team members (especially in connection with the auditor's assessment of audit evidence or in connection with the resolution of possible disputes with management).
An unusual delay in providing the requested information.
Unwillingness to facilitate the auditor's access to key electronic files, who wants to conduct tests using computer-aided audit techniques.
Failure to allow the auditor access to key IT personnel and facilities, including security, operating and system development personnel.
Reluctance to make annotations or revise disclosures in order to make financial statements complete and more understandable.
Unwillingness to respond in time to identified significant internal control deficiencies.
Other situations

Management's reluctance to allow the auditor to meet privately with those responsible for senior management.
Accounting policies that appear to differ according to industry norms.
Frequent changes in accounting estimates that cannot be explained by changing situations.
The company tolerates violations of the code of business ethics.