How would the fraud risk factors identified

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Reference no: EM132170399

KPMG's University Connection provides cases for higher education use. After watching the video above, read Case 2 - Pleasant Pasta and answer the questions below.

Case 2 - Pleasant Pasta

1. Based on your understanding of fraud risk assessment and the case information, identify at least three specific fraud risk factors related to Pleasant Pasta Company.

2. If you were responsible for planning the audit of Pleasant Pasta Company, how would the fraud risk factors identified in Question #1 have influenced the nature, timing, and extent of your audit work?

3. Please consider the five steps of the KPMG Judgment Framework. For each step, think carefully about what the auditors could have done to help detect the fraudulent activity related to the capitalization of trade promotion and manufacturing expenses at the Pleasant Pasta Company. Please use the following questions to guide your critical thinking about this case:

a. Clarify the issue and the objectives related to auditing whether certain trade promotion and manufacturing expenses should be capitalized by Pleasant Pasta. To do so, please ask yourself what specific problem needs to be solved by the auditor? What assumptions would have the biggest impact on the overall judgment to be made? How does this judgment relate to the overall audit process?

b. Consider the various alternatives that should be thought about when auditing whether certain trade promotion and manufacturing expenses should be capitalized at Pleasant Pasta. To do so, please ask yourself about each of the alternatives that are reasonably possible, even when they might contradict the client's point of view. Are there any external factors that should be considered?

c. Consider the type of information and evidence that should be gathered when completing the audit of the internal control activities related to the trade promotion and manufacturing expenses at Pleasant Pasta. To do so, please ask yourself about the type of information that would be helpful to determine whether the internal control activities were operating effectively. How can you be sure that the information is reliable? In addition, how can you be sure that the evidence is appropriate in this situation? Finally, what evidence could be gathered that might reveal that the internal control activities were NOT operating effectively.

d. Consider the type of information and evidence that should be gathered when completing the substantive testing procedures related to the trade promotion and manufacturing expenses at Pleasant Pasta. To do so, please ask yourself about the type of information that would be helpful to determine whether the trade promotion and manufacturing expenses were fairly stated in the financial statements. How can you be sure that the information is reliable? In addition, how can you be sure that the evidence is appropriate in this situation? Finally, what evidence could be gathered that might disconfirm your belief that the trade promotion and manufacturing expenses were fairly stated?

e. Consider the factors that would have to be thought about when reaching a final conclusion about the trade promotion and manufacturing expense accounts at Pleasant Pasta. Although you do not have access to the actual evidence, what "big picture" issues would have to be considered before reaching a final conclusion? Finally, what could possibly go wrong in this situation?

f. Consider the importance of documenting the rationale for your final conclusion. Why do you think it is important to document your rationale when finalizing your judgment? In addition, describe what is expected to be documented to support an auditor's professional judgment.

Attachment:- case-pleasant-pasta.rar

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The assignment answers questions from a case study. The case study is about accounting fraud done by a company.It is a KPMG case study. The subject is Auditing. Questions have been answered in detail as per the relevant auditing framework. Good knowledge of Auditing was required to complete the assignment. Everything has been explained in simple language that is easy to understand.

Reference no: EM132170399

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Reviews

inf2170399

12/24/2018 1:18:41 AM

Every problem when I asked they have the solution for the same. As in monetary terms they have justified pricing for every assignments. They can also give discount for regular students if being requested to them. They have highly experienced staff and they did it in so professional manner that my professor appreciated me for my assignment. The rates are quite affordable

len2170399

11/19/2018 2:01:04 AM

This criterion is linked to a Learning Outcome3f. Consider the importance of documenting the rationale for your final conclusion. Why do you think it is important to document your rationale when finalizing your judgment? In addition, describe what is expected to be documented to support an auditor's professional judgment. 9.0 pts The student solution identifies why documenting rationale is important and describes what should be documented to support an auditor’s professional judgement. 6.0 pts The student solution identifies why documenting rationale is important but does not describe what should be documented to support an auditor’s professional judgement. 3.0 pts The student solution does not directly identify why documenting rationale is important and/or does not describe what should be documented to support an auditor’s professional judgement. 0.0 pts No submission.

len2170399

11/19/2018 2:00:55 AM

This criterion is linked to a Learning Outcome3e. Consider the factors that would have to be thought about when reaching a final conclusion about the trade promotion and manufacturing expense accounts at Pleasant Pasta. Although you do not have access to the actual evidence, what "big picture" issues would have to be considered before reaching a final conclusion? Finally, what could possibly go wrong in this situation? 9.0 pts The student solution provides one or more “big picture” issues that should be considered before reaching a final conclusion and links those issues clearly to the case. 6.0 pts The student solution provides one or more “big picture” issues that should be considered before reaching a final conclusion but does not link those issues clearly to the case. 3.0 pts The student solution does not identify any “big picture” issues that should be considered before reaching a final conclusion. 0.0 pts No submission.

len2170399

11/19/2018 2:00:49 AM

3.0 pts The student solution does not identify any information and evidence that should be gathered related to substantive testing of trade promotion and manufacturing expenses or does not justify the information and evidence or provide suggestions on how to make sure it is reliable and appropriate. 0.0 pts No submission.

len2170399

11/19/2018 2:00:44 AM

9.0 pts The student solution identifies information and evidence that should be gathered related to substantive testing of trade promotion and manufacturing expenses and justifies the information and evidence as well as providing examples of evidence that may disconfirm the belief that the accounts were fairly stated. 6.0 pts The student solution identifies information and evidence that should be gathered related to substantive testing of trade promotion and manufacturing expenses and justifies the information and evidence but does not provide examples of evidence that may disconfirm the belief that the accounts were fairly stated.

len2170399

11/19/2018 2:00:38 AM

This criterion is linked to a Learning Outcome3d.Consider the type of information and evidence that should be gathered when completing the substantive testing procedures related to the trade promotion and manufacturing expenses at Pleasant Pasta. To do so, please ask yourself about the type of information that would be helpful to determine whether the trade promotion and manufacturing expenses were fairly stated in the financial statements. How can you be sure that the information is reliable? In addition, how can you be sure that the evidence is appropriate in this situation? Finally, what evidence could be gathered that might disconfirm your belief that the trade promotion and manufacturing expenses were fairly stated?

len2170399

11/19/2018 2:00:30 AM

9.0 pts The student solution identifies information and evidence that should be gathered related to the audit of internal control and justifies the information and evidence. The solution demonstrates that the student considered textbook material and research material related to auditing internal control. 6.0 pts The student solution identifies information and evidence that should be gathered related to the audit of internal control and justifies the information and evidence but does not consider textbook material and research material related to auditing internal control. 3.0 pts The student solution does not identify any information and evidence that should be gathered related to the audit of internal control or does not justify the information and evidence. 0.0 pts No submission.

len2170399

11/19/2018 2:00:23 AM

This criterion is linked to a Learning Outcome3c. Consider the type of information and evidence that should be gathered when completing the audit of the internal control activities related to the trade promotion and manufacturing expenses at Pleasant Pasta. To do so, please ask yourself about the type of information that would be helpful to determine whether the internal control activities were operating effectively. How can you be sure that the information is reliable? In addition, how can you be sure that the evidence is appropriate in this situation? Finally, what evidence could be gathered that might reveal that the internal control activities were NOT operating effectively?

len2170399

11/19/2018 2:00:14 AM

6.0 pts The student solution provides alternatives to be considered as to how to go about this item and identifies possible external factors that the case has provided that should be considered but the alternatives indicate that the student did not consider textbook material and research material related to auditing management estimates or risk. 3.0 pts The student solution does not provide alternatives to be considered as to how to go about auditing this item and does not identify any possible external factors that the case has provided that should be considered. 0.0 pts No submission.

len2170399

11/19/2018 2:00:10 AM

This criterion is linked to a Learning Outcome3b. Consider the various alternatives that should be thought about when auditing whether certain trade promotion and manufacturing expenses should be capitalized at Pleasant Pasta. To do so, please ask yourself about each of the alternatives that are reasonably possible, even when they might contradict the client's point of view. Are there any external factors that should be considered? 9.0 pts The student solution provides alternatives to be considered as to how to go about auditing this item and identifies possible external factors that the case has provided that should be considered. The solution demonstrates that the student considered textbook material and research material related to auditing management estimates and risk.

len2170399

11/19/2018 1:59:39 AM

This criterion is linked to a Learning Outcome3a. Clarify the issue and the objectives related to auditing whether certain trade promotion and manufacturing expenses should be capitalized by Pleasant Pasta. To do so, please ask yourself what specific problem needs to be solved by the auditor? What assumptions would have the biggest impact on the overall judgment to be made? How does this judgment relate to the overall audit process? (Hint: research what to do with internally developed intangible costs versus purchased intangible costs.) 9.0 pts The student solution clearly demonstrates an understanding of what should be expensed and what should be capitalized and has clearly identified what assumptions need to be clarified to determine the proper classification. 6.0 pts The student solution vaguely demonstrates an understanding of what should be expensed and what should be capitalized and has vaguely identified what assumptions need to be clarified to determine the proper classification. 3.0 pts

len2170399

11/19/2018 1:59:26 AM

This criterion is linked to a Learning Outcome2. If you were responsible for planning the audit of Pleasant Pasta Company, how would the fraud risk factors identified in Question #1 have influenced the nature, timing, and extent of your audit work? 9.0 pts The student solution addresses the question or problem by relating risk factors to the nature, timing and extent of audit work, and demonstrates a strong grasp of concepts and ideas in the textbook that apply to this question. 6.0 pts The student solution addresses the question or problem by relating risk factors to the nature, timing and extent of audit work, but may leave some gaps where the answer does not demonstrates a strong grasp of concepts and ideas in the textbook that apply to this question. 3.0 pts The student solution does not directly address the question or problem posed by relating risk factors to the nature, timing and extent of the audit work. 0.0 pts No submission. 9.0 pts

len2170399

11/19/2018 1:59:19 AM

Rubric Pleasant Pasta Company Case Study Rubric Pleasant Pasta Company Case Study Rubric Criteria Ratings Pts This criterion is linked to a Learning Outcome1. Based on your understanding of fraud risk assessment and the case information, identify at least three specific fraud risk factors related to Pleasant Pasta Company. 9.0 pts Three or more risk factors that are clearly related to Pleasant Pasta Company are identified and explained. 6.0 pts Three or more risk factors are identified but their relationship to Pleasant Pasta Company is vague. 3.0 pts The student solution either does not identify three specific risk factors or the solution does not clearly relate them to Pleasant Pasta Company. 0.0 pts No submission. 9.0 pts

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