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.

Question

Quizplus · Accepted Answer

Fraudulent activity may be intentionally concealed by perpetrators, particularly through collusion. Audit procedures that can be generally effective for detecting errors may be insufficient for detecting fraud, particularly when it is being intentionally concealed. Therefore, even a well-planned and executed audit may fail to detect material misstatements caused by fraud due to the nature of the fraud and its concealment.

A Properly Planned and Performed Audit May Fail to Detect