Which of the Following Statements Best Describes the Auditor's Responsibility

question 96

Multiple Choice

Which of the following statements best describes the auditor's responsibility regarding the detection of fraud?

• A) The auditor is responsible for the failure to detect fraud only when such failure clearly results from nonperformance of audit procedures specifically described in the engagement letter.
• B) The auditor is required to provide reasonable assurance that the financial statements are free of both material errors and fraud.
• C) The auditor is responsible for detecting material financial statement fraud, but not a material misappropriation of assets.
• D) The auditor is responsible for the failure to detect fraud only when an unqualified opinion is issued.

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Definitions:

Lost Check

A check that has been misplaced, destroyed, or otherwise lost, potentially leading to the issuance of a stop payment order and requiring a replacement.

Drawer

In banking and finance, the person who writes or issues a check or draft instructing the bank to pay a specified amount of money to a designated party.

Drawee

The party in a financial transaction who is directed to pay a certain sum of money as per the payer's instructions.

Stop Payment Order

A request made to a financial institution to cancel the payment or processing of a check or payment transaction before it has been completed.