The Audit of Financial Statements Includes the Initial Approach of Addressing

question 67

Multiple Choice

The audit of financial statements includes the initial approach of addressing fraud.How must an auditor address fraud in the planning stage?

• A)The auditor must test for fraud in the planning stage by sampling accounts.
• B)The auditor must consider the likelihood of fraud existing in the company in the planning stage.
• C)The auditor must realize that most people are honest and not automatically assume that fraud exists when planning the audit.
• D)The auditor must not be aggressive in its initial approach to fraud as trust may be lost by the client.

---

Definitions:

Gestalt Principles

A theory in psychology suggesting that people naturally organize their perceptions according to certain patterns.

Feature Analysis

A process in cognitive psychology that involves breaking down visual stimuli into individual components or features for recognition and interpretation.

Top-to-bottom Processing

Cognitive processing that starts with the formulation of the perceptual hypothesis about a stimulus and works downwards to finer detail.

Reversible Figures

Visual illusions or images that can be perceived in more than one way, revealing cognitive processes involved in visual perception.