Problems to Avoid When Brainstorming Fraud Risks

Keywords

audit brainstorming, fraud risk assessment, auditor judgment errors

Abstract

Nine years ago, in response to several accounting scandals, the AICPA passed Statement on Auditing Standards (SAS) 99, Consideration of Fraud. This standard requires auditors to conduct brainstorming sessions to increase their ability to identity potential sources of financial statement fraud. However, using brainstorming to effectively address this area of concern continues to be problematic for practitioners. In 2003, the SEC identified auditor judgment errors, including the failure to conduct adequate risk assessment, as one of the leading causes of audit failures. More recently, the Public Company Accounting Oversight Board (PCAOB) issued a report criticizing the profession for excessive variation in the quality of brainstorming sessions. Academic studies also echo the concern of the PCAOB and SEC that brainstorming is not being done correctly by practitioners. Clearly, auditors will benefit from a greater understanding of how to improve brainstorming sessions.

Original Publication Citation

"Problems to Avoid When Brainstorming Fraud Risks.", CPA Journal, Edition 4, Volume 81, 2011

Document Type

Peer-Reviewed Article

Publication Date

2011

Publisher

CPA Journal

Language

English

College

Marriott School of Business

Department

Accountancy

University Standing at Time of Publication

Associate Professor

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