What Should an Audit Team Do When It Discovers That

question 64

Multiple Choice

What should an audit team do when it discovers that fraud risk factors are present on an audit engagement?

• A) Retract from the client and inform regulatory bodies.
• B) Modify procedures to actively search for the existence of fraud.
• C) Reduce the amount of evidence required and resort to management inquiry.
• D) Turn the audit over to forensic accountants.

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Definitions:

Chemical Weathering

The process by which rocks are decomposed, dissolved, or loosened by chemical processes, often involving water.

Dissolution

The process by which a solid substance is dissolved in a liquid, becoming a part of the liquid solution.

Oxidation

A chemical reaction where a substance loses electrons, often leading to rust formation in metals.

Hydrolysis

A decomposition reaction involving water and commonly producing clays, as in soil.