Auditors Need to Be Attuned to the Red Flags That

question 13

Multiple Choice

Auditors need to be attuned to the red flags that fraud may exist because:

• A) Materiality judgments are based on red flags identifying possible material misstatements
• B) Audit opinions must be withdrawn when red flags indicate fraud may exist
• C) Overly-aggressive accounting and outright manipulation of earnings may exist
• D) All of the above

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Definitions:

Conjunctive

Relating to connections or associations between ideas, conditions, or events, emphasizing the co-occurrence and collaboration of factors.

Disjunctive

Pertaining to a relationship or situation involving a choice between mutually exclusive options.

Free Rider

An individual who benefits from resources or services without contributing to their cost or maintenance.

Compulsory

Required by law or a rule; obligatory, leaving no option for avoidance.