An Auditor Discovers a Likely Fraud During an Audit, but Concludes

question 20

Multiple Choice

An auditor discovers a likely fraud during an audit, but concludes that the effect of the fraud is not sufficiently material to affect the auditor's opinion.The auditor should:

• A)disclose the fraud to the appropriate level of the client's management.
• B)disclose the fraud to appropriate authorities external to the client.
• C)discuss with the client the additional audit procedures that will be needed to identify the exact amount of the fraud.
• D)modify the audit program to include tests specifically designed to identify the fraud and its impact on the financial report.

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Definitions:

Cataracts

A medical condition in which the lens of the eye becomes progressively opaque, leading to blurred vision and, potentially, blindness.

Lens

The lens is a transparent structure in the eye that, along with the cornea, helps to refract light to be focused on the retina for clear vision.

Chemical Changes

Transformations that result in the formation of one or more new substances with different chemical and physical properties from the original substances.

Ocular Nerves

The nerves associated with the eye that are responsible for transmitting visual information from the retina to the brain.