The auditor has a responsibility to respond to fraud risk by planning and performing the audit to obtain reasonable assurance that material misstatements, whether due to error or fraud, are detected; therefore, the auditor should:
A) maintain a level of professional scepticism.
B) always assume that management is dishonest.
C) always assume unquestioned honesty.
D) expect to find fraud on all audits.

Question

Quizplus · Accepted Answer

Maintaining professional scepticism means the auditor should approach the audit with a questioning mind and consistent attitude of critical appraisal. This assists the auditor in identifying circumstances that may indicate the existence of fraud or errors. Assuming management is dishonest (B) or unquestioned honesty (C) are both extremes and not recommended approaches, while expecting to find fraud on all audits (D) is unrealistic and may lead to biased auditing.

The Auditor Has a Responsibility to Respond to Fraud Risk