What Is the Best Method an Auditor May Use to Detect

question 23

Multiple Choice

What is the best method an auditor may use to detect fraud in the financial statements of clients?

• A)Use professional skepticism.
• B)Understand and properly apply Generally Accepted Accounting Standards.
• C)Brainstorm with the client to find the types of fraud occurring.
• D)Actively search for all errors in the financial statements.

---

Definitions:

Net Realisable Value Method

An accounting technique used to value inventory or assets, determining the estimated selling price in the ordinary course of business minus any costs necessary to make the sale.

By-product Revenue

Revenue generated from secondary products produced during the manufacturing process of a primary product.

Joint Process Costs

Costs incurred during a production process that yields multiple products simultaneously until the point of separation where products can be identified individually.

Make or Buy Decision

A decision-making process where a business evaluates the cost benefits of manufacturing a product in-house versus purchasing it from an external supplier.