In short
Management override of controls is management's ability to manipulate records and produce fraudulent financial statements by bypassing controls that otherwise seem to work. Auditors treat it as a fraud risk in every audit.
Key takeaways
- Three procedures are always required: test journal entries and other adjustments, review accounting estimates for bias, and evaluate the business rationale for significant unusual transactions.
- The risk exists even when controls are well designed.
- It is treated as a significant risk.
Where it's tested
AUD: Fraud Risk — study notes, a five-minute revision sheet and practice questions.
Practise: 3 questions
Question 1 of 3 · 0 answered
Which fraud-related presumption can NEVER be rebutted by the auditor?