Certified Fraud Examiner Practice

The primary action that auditors must take regarding fraud, as outlined in AU Section 240, is to brainstorm potential fraud scenarios. This step is essential because it encourages auditors to consider various ways in which fraud could occur within the organization. By identifying possible fraud schemes, auditors can better assess risks and design appropriate audit procedures to detect and prevent fraud. Brainstorming potential scenarios fosters a proactive approach, allowing the audit team to leverage collective insights and experiences to help uncover vulnerabilities that may not be immediately evident. This method also encourages open discussions about the nature of fraud, its potential impact on the company, and the specific areas where fraud is most likely to occur, hence strengthening the audit process. The other options, while they may have their place in an overall audit approach, do not serve as the primary action regarding assessing fraud risks as dictated by AU Section 240. Ensuring clients are aware of potential fraud and conducting employee interviews can support fraud detection efforts, but they do not directly align with the mandated brainstorm approach. Randomly sampling transactions is more of a testing procedure and does not focus on identifying potential fraud risks upfront. Therefore, the focus on brainstorming as a key action emphasizes the importance of risk assessment in the audit process.