PCAOB requires auditors to conduct substantive procedures regardless of the assessed level of control risk (AS2301.36). Although this rule is not applicable to private companies including Theranos, substantive procedures are effective to assert fairness of financial statements.
Though we cannot obtain information on specific methods by which Theranos manipulated its revenue, examples of fraudulent means to increase revenue includes following: recording the same sales twice, creating phony shipping documents to record nonexistent sales, recording sales before services are delivered. Following substantive procedures may detect them: vouching sampled sales recorded to support documents (customer orders, shipping documents, and invoices), inspecting
Though we cannot obtain information on specific methods by which Theranos manipulated its revenue, examples of fraudulent means to increase revenue includes following: recording the same sales twice, creating phony shipping documents to record nonexistent sales, recording sales before services are delivered. Following substantive procedures may detect them: vouching sampled sales recorded to support documents (customer orders, shipping documents, and invoices), inspecting