Why Is Fraud Detection an Important Part of the Audit

question 30

Multiple Choice

Why is fraud detection an important part of the audit?

• A)Auditors are required to seek out and find all fraud,regardless of its magnitude.
• B)Auditors expect that management will make them aware of any fraud in the financial statements.
• C)Society expects that financial statements have not been materially misstated due to fraud.
• D)Society realizes that some fraud was not intended to be discovered by auditors.

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Definitions:

Finished Goods Account

An accounting ledger where the value of a company's inventory of products that are complete and ready for sale is recorded.

Wage Rate

Wage rate refers to the standardized amount of compensation paid to employees for their labor, either per hour, day, or piece.

Standard Wage Rate

A predetermined rate of pay for a particular job or task, often used in budgeting and cost control to standardize labor costs.

Direct Labor

Direct labor refers to the work done by employees that is directly involved in the production of goods or the provision of services.