We examine how an auditor assesses the risk of fraud and formulates an audit plan when the auditee has the opportunity to commit various types of fraud. Unlike previous studies, the auditee can misappropriate assets (also called defalcation), misreport financial information (also called...

We examine how an auditor assesses the risk of fraud and formulates an audit plan when the auditee has the opportunity to commit various types of fraud. Unlike previous studies, the auditee can misappropriate assets (also called defalcation), misreport financial information (also called...