Key CPA Exam Takeaways

High-Yield Review

• Fraud involves intentional misstatement; errors are unintentional.
• The two primary fraud categories are fraudulent financial reporting and asset misappropriation.
• The Fraud Triangle consists of pressure, opportunity, and rationalization.
• Professional skepticism requires a questioning mind and critical evaluation of evidence.
• Management override of controls is a significant fraud risk factor.
• Auditors provide reasonable—not absolute—assurance of detecting material fraud.
• Illegal acts that directly affect financial statements require greater auditor attention.
• Suspected fraud requires additional audit procedures, documentation, and communication.
• Fraud by senior management is communicated directly to those charged with governance.

Professional skepticism is the auditor's strongest defense against fraud.