Which of the Following Is Required of the Audit Team

question 84

Multiple Choice

Which of the following is required of the audit team relative to its consideration of fraud in a financial statement audit?

• A)Documentation in the audit file.
• B)Communication with the AICPA.
• C)Modification of client financial records.
• D)Termination of the manager responsible for the fraud.

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Definitions:

Overconfidence

A cognitive bias where an individual overestimates their abilities or the precision of their knowledge, often leading to mistakes in judgment.

Behavioral Biases

Psychological tendencies that affect investment decisions and financial behaviors.

Fundamental Risk

Risk that even if an asset is mispriced, there is still no arbitrage opportunity because the mispricing can widen before the price eventually converges to intrinsic value.

Implementation Costs

Refers to the expenses involved in putting a business plan or project into action, including technology, manpower, training, and other related costs.