The risk typically appears as fictitious sales near period-end, premature revenue recognition or side agreements. If the presumption is rebutted, the reasons must be documented in the audit file.
Source: BDS 240
Related terms
FraudAn intentional act of deception by management, employees or third parties to obtain an unjust or illegal advantage.RevenueIncome arising in the course of an entity's ordinary activities.Cut-off testingAn audit procedure that tests whether transactions near the period end are recorded in the correct accounting period.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: November 8, 2026 · This definition is for general information only.