Because this risk is present in every entity, it is always treated as a significant risk. The auditor tests journal entries and period-end adjustments, reviews estimates for bias and examines significant unusual transactions.
Source: BDS 240
Related terms
FraudAn intentional act of deception by management, employees or third parties to obtain an unjust or illegal advantage.Occupational fraudDeceptive acts carried out knowingly to obtain an unjust or illegal benefit; misappropriation of assets and fraudulent financial reporting are its main types.Segregation of dutiesA fundamental internal control principle requiring that initiating, approving and recording transactions and safeguarding assets be assigned to different people.Adverse opinionThe opinion in which the auditor states that the financial statements are not presented fairly, where misstatements are both material and pervasive.Agreed-upon proceduresAn engagement in which the practitioner performs procedures agreed with the entity and, where relevant, a third party, and reports only the findings without providing assurance.Analytical proceduresThe evaluation of financial information through analysis of plausible relationships among financial and non-financial data.
Last updated: October 31, 2026 · This definition is for general information only.