Auditing Red Flags
Train your audit team to spot the warning signs that often precede fraud, error, weak controls, and material misstatements. This course walks auditing professionals through red flags in revenue, cash, receivables, estimates, related parties, IT, and more, then shows how to link those risks to assertions, expand procedures, document findings, and apply professional skepticism through practical examples and case studies. It helps auditors focus effort where it matters most during complex, high-risk financial statement audits.
Format
PDF Course
Course Lists
Duration
8 Hours
Course Information
Author: Steven Bragg
Course number: AU1046
Learning Objectives
- Recognize the nature of professional skepticism.
- Recall the reasons for evaluating combinations of red flags.
- Recognize the effect of a red flag on audit timing.
- Specify the types of asset misappropriations.
- Recall why corruption can be difficult to detect.
- Recognize the elements of the fraud diamond.
- Recall why weak custody controls are important for the auditor.
- Recognize the governance conditions that can be considered red flags.
- Specify the importance of an inadequate internal audit function.
- Recall why having no whistleblower complaints can be a problem.
- Recognize the risks associated with rapid growth.
- Recall why structural complexity increases audit risk.
- Recognize why complex structures are concerning for the auditor.
- Specify why industry instability is relevant to red flag analysis.
- Recall why contract analysis is needed when auditing revenue.
- Recognize which audit techniques to apply when fictitious sales are suspected.
- Recall the the situations suggesting a problem with receivable collectability.
- Recognize why round-dollar entries deserve extra audit scrutiny.
- Specify the circumstances in which auditors inspect subsequent shipment evidence.
- Recall the events that raise doubts about year-end sales.
- Recognize why delayed deposits are a red flag.
- Recall why auditors should examine repeated transfers through multiple bank accounts.
- Recognize why manual cash journal entries can be concerning.
- Specify why vague reconciling items in bank reconciliations need to be investigated.
- Recall the behavior associated with anchoring bias.
- Recognize why red flag documentation is needed.
- Recall why follow-up procedures should be linked to specific red flags.
- Recognize the auditor communications used when fraud may involve senior management.
- Specify the types of forensic procedures used by auditors.
- Recall how data analytics can be used to investigate red flag situations.
- Recognize why continuous improvement is needed in audits.
- Recall the red flags associated with specific industries.
Level: Overview
Instructional Method: QAS Self-Study
NASBA Category: Auditing
Prerequisites: None
Advance Preparation: None
Latest Review Date: March 2026
Program Registration Requirements: Click on the Enroll button to pay for and access the course. You will then be able to download the course as a PDF file, then take an on-line examination, and then download a certificate of completion if you pass the examination.
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