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:

Labor Market Supply

The total pool of individuals available and qualified to work, determined by factors such as demographics, education, and willingness to work at prevailing wage rates.

Theory Y

A management theory which suggests that employees are naturally motivated, enjoy working, and will exhibit self-control and self-direction if they are committed to the objectives of the organization.

Competitive Advantage

A condition or circumstance that puts a company in a favorable or superior business position compared to its competitors.

Decision Making

The cognitive process of selecting a course of action from among multiple alternatives, often involving aspects of logic, emotions, and values.