18 Questions
What is the auditor's primary responsibility regarding client confidentiality according to the text?
The auditor must determine if there is a responsibility to report suspected fraud to a party outside the entity.
Which of the following is NOT required to be documented by the auditor according to the text?
Results of audit procedures performed.
What is the traditional 'passive philosophy' towards the auditor's responsibility for fraud detection according to the text?
The auditor is not bound to be a detective or approach the audit with suspicion.
What is the auditor's role in relation to fraud detection?
The auditor is responsible for assessing the risk of fraud and designing appropriate audit procedures.
What is the significance of the auditor's decision to not consider the risk of fraud in revenue recognition as a 'significant risk' according to the text?
This decision must be documented by the auditor as part of the audit documentation.
What is the main shift in auditor responsibilities regarding fraud detection described in the text?
Auditors are now required to determine if there is a responsibility to report suspected fraud to a party outside the entity.
What is the auditor's responsibility regarding the oversight of management's fraud risk assessment and response processes?
The auditor should understand how those charged with governance, such as the audit committee, exercise oversight of management's fraud risk assessment and response processes.
What is the auditor's responsibility regarding inquiries about fraud with those charged with governance?
The auditor is required to inquire whether those charged with governance have knowledge of any actual, suspected or alleged fraud affecting the entity.
What is the purpose of performing analytical procedures during the planning stage of the audit?
Analytical procedures during planning may be helpful in identifying unusual or unexpected relationships or events that might indicate material misstatements, particularly in revenue accounts.
What is the auditor's responsibility regarding the presumption of fraud risks in revenue recognition?
The auditor should consider which types of revenues may give rise to fraud risks, as the auditor ordinarily presumes that there are risks of fraud in revenue recognition.
What is the auditor's responsibility regarding management's response to any findings resulting from the auditor's fraud detection procedures?
The auditor should understand whether management has satisfactorily responded to any findings resulting from the auditor's fraud detection procedures.
What is the auditor's responsibility regarding other information obtained that may indicate a risk of material misstatement due to fraud?
The auditor should consider whether other information obtained indicates a risk of material misstatement due to fraud.
What should management acknowledge its responsibility for in addition to the financial statements?
Fraud detection and prevention
What must the auditor obtain written representations from management about regarding fraud?
Design and implementation of internal control to prevent and detect fraud
When should the auditor communicate identified or potential fraud to management and governance authorities?
On a timely basis
What should the auditor do if they determine that fraud may be present?
Communicate with the appropriate level of management, senior management, and governance as soon as practicable
What should management disclose to auditors in relation to fraud?
Results of its assessment of the risk of frauds
Why is it important for auditors to communicate fraud matters promptly?
To inform those responsible for fraud prevention and detection
This quiz covers the auditor's duty to report fraud occurrences or suspicions to external parties, despite the obligation to maintain client confidentiality. It also includes documentation requirements related to the auditor's understanding of the entity and its environment, significant decisions made during engagements, and risk assessment for fraud at different levels.
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