The Auditor Has a Responsibility to Respond to Fraud Risk

question 47

Multiple Choice

The auditor has a responsibility to respond to fraud risk by planning and performing the audit to obtain reasonable assurance that material misstatements, whether due to error or fraud, are detected; therefore, the auditor should:

• A) maintain a level of professional scepticism.
• B) always assume that management is dishonest.
• C) always assume unquestioned honesty.
• D) expect to find fraud on all audits.

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Definitions:

Innovation

The first commercially successful introduction of a new product, use of a new method of production, or creation of a new form of business organization.

Property Value

The market worth of a property, including land and any buildings on it, influenced by location, condition, and market trends.

Market System

A market system is an economic system in which decisions regarding investment, production, and distribution are based on supply and demand, and prices are determined in a free price system.

Property Rights

Property rights are the legal rights to use, control, and dispose of property, including land, buildings, or intellectual property.