(PCAOB, 2013, AS 2201: No. 5). If the parts of a account are distinct enough to have alternative risks, alternative controls may be applied to that risk ( PCAOB, 2013, AS
2201: No. 5).
Sunbeam had two different types of revenue: Domestic operations and international sales. Domestic operations included health care products, personal care and comfort products, outdoor cooking products, household appliances, and “ away from home” business ( Thibodeau and Freir, 2014, p. 98). Household appliances made up 29 percent of domestic net sales ( Thibodeau and Freir, 2014, p. 98).The household appliances were coffeemakers, toasters, and bread makers etc ( Thibodeau and Freir,
2014, p. 98). The health care products made up 11 percent of domestic net sales
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An auditor may increase the nature, timing, and extent of substantive tests affiliated with controls regarding the transactions related to international sales ( PCAOB, 2013, AS
2201: No. 5).
4. Consult Paragraph 52-53 of PCAOB Auditing Standard No. 12. For one of Sunbeams
Revenue Types ( please choose one), brainstorm about how a fraud might occur. Next identify an internal control procedure that would prevent, detect, or deter such a fraudulent scheme.
Answer: Engagement team members should think of ways the organizations financial statements might have material misstatements caused by fraudulent acts and how assets of the organization may be improperly recorded ( PCAOB, 2013, AS 2110: No. 12). “The discussion among the key engagement team members about the potential for material misstatement due to fraud should occur with an attitude that includes a questioning mind, and the key engagement team members should set aside any prior beliefs they might have that management is honest and has integrity” (PCAOB, 2013, AS 2110: No. 12).
Professional skepticism should be employed by engagement team members when conversing about the possibility of material misstatements in the financial