QUESTION 2 Part A Read the paragraph below, and answer the following questions. 32 percent of Fraud Committed by Senior Management KUALA LUMPUR: About 32% of the most impactful fraud suffered by organisations in Malaysia were committed by the senior management, compared with 24% globally, said PwC Consulting Associates (M) Sdn Bhd, citing a recent survey. PwC Malaysia managing partner Sridharan Nair noted that the figure forms part of the 69% of the most impactful fraud suffered by organisations in Malaysia which were committed by internal fraudsters, versus 52% globally. "If leaders [of the organisations] don't set the right tone, this sends the message that such behaviours (bribery and corruption) are acceptable," he told reporters yesterday at a media briefing in conjunction with the launch of PwC's 2018 Global Economic Crime and Fraud Survey findings for Malaysia. He saw the high number of fraud committed by senior management as "a worrying trend", because they can always "override controls" over fraudulent acts, even if those are picked up by detection systems. Meanwhile, 35% of the respondents reported suffering bribery corruption in the last two years, which grew from 30% in 2016. Note that it was 19% in the 2014 survey. Source: Wong Ee Lin, The Edge Financial Daily, August 30 2018. Required: (i) What does an auditor need to do when he/she identifies fraud in the client's company? (8 marks) (ii) Identify the differences between a fraud and an error, as defined in ISA 240 The Auditor's Responsibilities Relating to Fraud in an Audit of Financial Statements. (4 marks) (iii) Do you think corruption is related to fraudulent financial reporting? Why? (3 marks) (Total: 15 marks)