| Course | ACC 691 Detection and Prevention of Fraudulent Financial Statements |
|---|---|
| Module | Module 7 |
| Paper type | graduate discussion post on auditor responsibility and professional skepticism |
| Length | About 420 words, 3 pages |
| Format | APA 7 student paper |
| School | Southern New Hampshire University |
| Program | MS Accounting |
| Updated | October 2026 |
Free sample paper for ACC 691 Module 7
Module Seven Discussion
Two Clean Opinions
The company's auditors, a regional office of a large national firm, issued clean opinions on both the 2024 and 2025 statements, the second only weeks before the investigation began. I do not think the team was careless; the workpapers show many hours on revenue. But four decisions, taken together, explain how nearly $58 million of improper pretax income across two years passed through.
First, receivable confirmations went to the twenty largest restaurant chains, covering 64 percent of the balance. None went to dealers, though dealer receivables had tripled over the closing fortnight of December. A confirmation that asked dealers about terms and return rights would have surfaced the side letters in 2024 rather than 2026. Second, the team supported bill-and-hold sales with letters from customers requesting the arrangement. The letters were dated in December but signed in January, after the auditors' cutoff work began, and the scans showed it. Third, the team observed the count at the main plant and relied on the controller's report for the second plant, so the double counting was invisible. Fourth, it recomputed the capitalization memo and agreed hours to the project code but never asked an engineer what the hours bought.
Nelson (2009) separates doubting from doing something about the doubt: auditors may distrust a document and still not act if the cost of pursuing it seems high or the client relationship discourages it. Hurtt (2010) treats skepticism partly as a personal trait, which suggests staffing matters. DeFond and Zhang (2014) note that audit quality is shaped by incentives as well as competence. Here the firm had cut its fee for 2024 to retain the client, and the engagement partner was in his first year. I suspect both pushed the team toward procedures that were efficient rather than pointed.
What I keep coming back to is that each decision was defensible on its own. Confirming the largest balances is a normal sampling choice, letters from customers are ordinary evidence, and observing the larger plant is common when the second site is small. The failure was in not connecting the decisions to the risks the team had itself documented in planning, where revenue cutoff and dealer terms were both listed. Brainstorming named the risk, but the procedures never answered it.
For classmates: the standards presume revenue is a fraud risk, yet confirming dealers would have added cost the client had refused to pay. Was the decision to skip dealers a judgment call the auditors were entitled to make, or a failure to respond to a presumed risk?
References
DeFond, M., & Zhang, J. (2014). A review of archival auditing research. Journal of Accounting and Economics, 58(2-3), 275-326. https://doi.org/10.1016/j.jacceco.2014.09.002
Hurtt, R. K. (2010). Development of a scale to measure professional skepticism. Auditing: A Journal of Practice & Theory, 29(1), 149-171. https://doi.org/10.2308/aud.2010.29.1.149
Nelson, M. W. (2009). A model and literature review of professional skepticism in auditing. Auditing: A Journal of Practice & Theory, 28(2), 1-34. https://doi.org/10.2308/aud.2009.28.2.1
What the ACC 691 Module 7 instructions ask for
The Module Seven discussion in ACC 691 asks about the external auditor's role in detecting financial statement fraud. Prompts typically ask what auditors are responsible for, why audits sometimes miss material fraud and what could have been done differently in a case. A useful post moves past the general statement that audits provide reasonable rather than absolute assurance and examines particular procedures: which accounts were tested, how evidence was evaluated and where management's explanations were accepted without corroboration. Research on professional skepticism and on audit quality gives the post depth, particularly work that explains why doubt does not always lead to more testing. Replies work best when they question whether a classmate's criticism relies on hindsight.
How this ACC 691 Module 7 discussion example is built
The post examines four audit decisions at a kitchen equipment maker. Receivable confirmations went to the twenty largest restaurant chains, which covered 64 percent of the balance but none of the dealers who had received side letters. The team accepted customer letters supporting $19 million of bill-and-hold sales without noticing they were signed in January. It observed the inventory count at the main plant but not at the second plant forty miles away. And it recomputed the capitalization memo without asking engineers what they had worked on. The post cites Nelson on what drives skeptical judgment and Hurtt on skepticism as a trait, and asks whether the firm's fee pressure mattered.
Where the ACC 691 Module 7 rubric puts the points
Scoring for this discussion usually covers an accurate account of auditor responsibility, analysis of specific procedures in the case, use of auditing standards and research, balance between criticism and the limits of an audit, and engagement. Strong posts identify the point where a reasonable auditor should have demanded more evidence and explain what evidence would have changed the result. Posts that simply say the auditors should have been more skeptical, or that blame them for every undiscovered fraud, earn less. Replies gain credit when they distinguish an error in judgment from a failure to follow the standards. Citing the fraud standard's requirements, such as brainstorming and responses to revenue risk, helps.
ACC 691 Module 7 help: the mistakes that cost points
Many posts on this topic argue from hindsight, criticizing auditors for not knowing what only the investigation later revealed. A better approach is to ask what the auditors knew or could easily have learned at the time, such as the timing of the bill-and-hold letters, and whether the standards required them to follow up. Another weakness is ignoring that the standards presume revenue recognition is a fraud risk; a post that notes this can ask why the procedures did not reflect it. Keep the research brief and tie it to one decision. End with a question that makes classmates choose between two defensible positions, so the replies have something to argue about.
Get ACC 691 Module 7 written to your instructions
Send the ACC 691 Module 7 prompt and the case. You will get a post that judges specific audit decisions against the auditor's fraud duties, cites research on skepticism and leaves classmates a fair question. Two days is typical, and a first post is free. The paper above is an original model document written by our desk, not a submitted student paper and not an official Southern New Hampshire University document.
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ACC 691 Module 7 questions, answered
Where can I find a free ACC 691 Module 7 Discussion sample?
The complete ACC 691 Module 7 post appears on this page, examining four audit decisions at a kitchen equipment maker that later restated.
Are auditors responsible for detecting fraud?
They carry a duty to design their work so that material misstatement from deliberate deception, as well as from honest error, is reasonably likely to surface, yet the standards accept that a well-run audit can still miss a concealed scheme.
What is professional skepticism?
A habit of doubting what management says until something independent backs it up, and of weighing each piece of evidence for how easily it could have been manufactured.
Why do audits miss financial statement fraud?
Collusion, forged or backdated documents, management override, time and fee pressure and over-reliance on management's representations all make fraud hard to detect.
Why is revenue a presumed fraud risk?
Because revenue is the most common area of financial statement fraud, the auditing standards require auditors to presume a risk of material misstatement due to fraud in revenue recognition.