International Audit Standard No. 240 and Its Impact on the Practical Procedures of Auditors in Detection the Manipulation of Financial Statements

Abstract

This study aims to explore the role of International Audit Standard No.240 on the auditor’s procedures in detecting manipulation and fraud of financial Statements, the descriptive approach was used in conducting this study, through viewing the related literature in order to indentify the practices that lead to manipulation. And by identifying the auditor’s responsibilities according to the International Audit Standard No. 240. The results showed that firms may commit manipulation in several ways, such as recording the current expenses as capital expenses, to reduce costs and increase profits which may lead managers to ask for rewards. Therefore, the auditor must make greater efforts to the following:

-          Focusing on financial events that have different accounting treatments, such as record maintenance expenses, at the fixed asset account. The purpose of this action is to reduce costs and increase profits, which may lead to request, a reward by managers.

-          Comparing manager’s Salaries with Past year.

-          Comparing financial ratios of the company with its counterparts in the market.

-          Send support certificates for suppliers to make sure their account balances, in order to ensure the registration of all Purchases futures in inventory account.