A Properly Planned and Performed Audit May Fail to Detect

question 8

Multiple Choice

A properly planned and performed audit may fail to detect a material misstatement resulting from fraud because

• A) Audit procedures that are otherwise effective may be ineffective for fraud that is concealed through collusion.
• B) An audit is planned and performed to provide reasonable assurance of detecting material misstatements caused by errors but not by fraud.
• C) The factors considered in assessing control risk indicated an increased risk of error but only a low risk of fraud in the financial statements.
• D) The auditor did not consider factors influencing audit risk for account balances that have effects pervasive to the financial statements taken as a whole.

---

Definitions:

Coregulation

A gradual transferring of control from parent to child, beginning in middle childhood.

Clarinet Lessons

Instruction and practice sessions focused on teaching how to play the clarinet, a woodwind instrument.

Learned Helplessness

A psychological condition in which individuals learn to believe they have no control over the outcome of situations, often resulting from repeated exposure to uncontrollable and negative events.

Negative Cognitive Capacity

involves limitations in the cognitive processing that can lead to difficulties in understanding, reasoning, and decision-making.