While IT Support is working with an issue with your computer, you are temporarily sitting in a cubical near the area where the majority of the staff accountants with your firm also have cubicles. While sitting there reading a document for a client meeting later that afternoon, you overheard portions a conversation between two experienced staff accountants.

Staff A: Hey, did you hear that the volunteer treasurer of our local volunteer fire department was convicted of stealing $700,000 of the department's cash?

Staff B: Yes, I did hear about that. That's terrible. My brother has a friend that volunteers there. He told my brother that this guy had volunteered at the department for years and that everyone was shocked at what he did.

Staff A: I guess he will go to prison. Such a shame, I heard that he has a family, including two small children.

Staff B: I wonder if the department's financial statements were audited.

Staff A: They must not have been audited because an audit is a guarantee that no fraud has occurred or would have been caught by the audit procedures years ago before the number got so big.

Staff B: Yea, that's why they pay us the big bucks. On that audit that we just completed, I saw in the engagement letter that our fee was $250,000.

Staff A: Wow!! But it's worth it if we guarantee no fraud.

Staff B: Let's go to lunch.

Staff A: Sounds great!

Required:

Based upon what you overheard in this staff discussion, prepare some notes about what you want to make sure that you talk about in the technical portion of the office's next staff meeting. Make certain that is discussed at a minimum: (1) who has primary responsibility for the prevention and detection of fraud; and (2) the auditor's responsibilities for detection of fraud.