Cendant Corporation

C finishant Corporation 1 (a) Related parties make decisions based on information provided by financial statements. It is the inspectors responsibility to plan and perform audit engagement to offer reasonable assurance that the financial statements are meliorate and fair. (b) The two main categories of fraud that be active financial reporting let in misstatements arising from fraudulent financial reporting and misstatements arising from misappropriation of assets. c) Factors that auditors should sum up when assessing the likelihood of material misstatements due to fraud include whether or non the company has a reason to make something seem consistent (rationalization), whether or not the company or individuals have an incentive or printing press on them, and whether or not the company has the opportunity to commit fraud. (d) umpteen factors existed during the 1995 to 1997 audits of CUC that created an environment conductive for fraud. For example, CUCs top forethought was ag gressive to profit their market share due to the pressure put on them to watch analyst expectations.CUC had been committing the same type of fraud for many years in advance 1995, so it was rational for them to maintain their consistency. One person even give tongue to that he thought he was only doing his job. The adjustments that were made at the end of each year brought about the opportunity for CUC to also commit fraud. 3 (a) In the Cendant fraud centering override occurred when the CUC management recognized deferred revenue as revenue immediately, or delaying recognition of genus Phallusship cancelations. (b) To further address the bump of management override of sexual controls auditors must remain skeptical that management override exists.Auditors should also become familiar with the company and its internal controls upon acceptance. 5 (a) A company whitethorn want to hire a member of its external audit team because the auditor is familiar with the company, or managemen t has developed a strong on the job(p) relationship with the auditor from working on the audit together. (b) If the client has hired former auditors it might affect the independence of the existing external auditors in fact and appearance. Current auditors may rely on the representation made by former co-workers.