What should an audit team do when it discovers that fraud risk factors are present on an audit engagement?
A) Retract from the client and inform regulatory bodies.
B) Modify procedures to actively search for the existence of fraud.
C) Reduce the amount of evidence required and resort to management inquiry.
D) Turn the audit over to forensic accountants.

Question

Quizplus · Accepted Answer

When fraud risk factors are present, the audit team should modify procedures to actively search for the existence of fraud. This may include gathering additional evidence and performing procedures specifically designed to detect fraud. It is not appropriate to retract from the client, inform regulatory bodies, or reduce the amount of evidence required. Turning the audit over to forensic accountants may be necessary in cases of suspected fraud, but it is not the first step to take when fraud risk factors are present.

What Should an Audit Team Do When It Discovers That