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

question 18

Multiple Choice

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

• A)The auditor must extend auditing procedures to actively search for fraud.
• B)The auditor is responsible for the failure to detect fraud only when an unmodified auditor's opinion is issued.
• C)The auditor is responsible for fraud when such failure results from non-performance of procedures described in the engagement letter.
• D)The auditor must plan the audit so as to have a reasonable expectation of discovering material fraud.

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Definitions:

Variable Cost Per Unit

The cost associated with producing one additional unit of a product, which can change depending on the level of production or sales.

Cost Volume Profit Analysis

An accounting technique used to determine how changes in costs and volume affect a company's operating income and net income.

Selling Price Per Unit

The amount of money charged to the customer for one unit of a product or service.

Fixed Expenses

Costs that do not change with the level of production or sales, such as rent, salaries, and insurance premiums.