A Risk Perspective on Fraudulent Financial Reporting

45 Pages Posted: 5 Jan 2006 Last revised: 10 Aug 2008

See all articles by Wally Smieliauskas

Wally Smieliauskas

University of Toronto - Rotman School of Management

Date Written: October 1, 2005


This paper analyzes the relationship of fraud risk assessments to other risk assessments by auditors. The PCAOB (2005, 17) notes this is a problem area of current practice. The major findings are as follows. First, the study identifies the crucial role of benchmarks in forensic accounting to help differentiate between intentional and unintentional misstatements. Second, the paper shows the importance of not allowing the major categories of risks identified here from getting too high. This explains the need to set acceptable levels of these risks either by standard setters as a matter of broad policy, or by individual practitioners as part of the terms of specific engagements. Third, this paper clarifies how the fraud risk of SAS No. 99 relates to the traditional audit risk model framework.

Keywords: fraud, accounting, auditing, risk, financial reporting

JEL Classification: D81, M49, M41, M43, G38

Suggested Citation

Smieliauskas, Wally, A Risk Perspective on Fraudulent Financial Reporting (October 1, 2005). Canadian Accounting Perspectives, Vol. 7, No. 3, 2008. Available at SSRN: https://ssrn.com/abstract=873520 or http://dx.doi.org/10.2139/ssrn.873520

Wally Smieliauskas (Contact Author)

University of Toronto - Rotman School of Management ( email )

105 St. George Street
Toronto, Ontario M5S 3E6 M5S1S4

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