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

question 16

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 non-performance of audit procedures specifically described in the engagement letter.
• B) The auditor must extend auditing procedures to actively search for evidence of fraud in all situations.
• C) The auditor should design auditing procedures to provide reasonable assurance that fraud material to the financial report is detected.
• D) The auditor is responsible for the failure to detect fraud only when an unmodified opinion is issued.

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Definitions:

Human Capital

The economic value of a worker's experience and skills, including education, training, intelligence, and health.

Physical Capital

The tangible assets that a company uses in the production of goods or services, such as machinery, buildings, and vehicles.

Union Labor

Union labor consists of workers who are members of a labor union, which negotiates wages, work conditions, and benefits on their behalf.

Average Wages

The mean income calculated by dividing the total wage pool by the number of wage earners, used as an indicator of economic health and labor market conditions.