Audit and Assurance Practice Exam

What is the primary objective of engaging in brainstorming sessions when assessing fraud risk?

1. Identify past fraud cases for training purposes.

2. Consider motivations, opportunities, and justifications for committing fraud.

3. Ensure no fraud occurs in the current period.

4. Document every transaction for auditing purposes.

The correct answer is: Consider motivations, opportunities, and justifications for committing fraud.

Engaging in brainstorming sessions when assessing fraud risk is crucial for a comprehensive risk assessment process. The primary objective of these sessions is to consider the motivations, opportunities, and justifications for committing fraud. This involves gathering insights from various team members, each bringing diverse perspectives and experiences that can help in identifying potential fraud risks. By discussing these elements, the team can better understand how and why individuals might commit fraud within the organization, leading to the development of more effective controls and audit procedures to mitigate those risks. This approach allows auditors and management to create a proactive stance against fraud rather than reacting to it after the fact. It fosters an environment where potential fraud indicators can be openly discussed and considered, ultimately enhancing the organization’s ability to prevent and detect fraudulent activities. Other options do not capture the essence of brainstorming in this context. Identifying past fraud cases for training purposes focuses more on historical analysis rather than proactive risk assessment. Ensuring no fraud occurs in the current period is an unrealistic assertion, as fraud cannot be entirely prevented through assurance processes; rather, effective frameworks can reduce the risk. Documenting every transaction for auditing purposes is essential for transparency and accountability but does not address the critical thinking and risk assessment aspects that brainstorming facilitates.