If the auditor discovers information indicating a material misstatement due to fraud may have occurred, the auditor should immediately withdraw from the audit engagement.

Question

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The auditor should not immediately withdraw from the audit engagement if they discover information indicating a material misstatement due to fraud. Instead, they should consider the nature and extent of the fraud, assess the risk of further misstatements, and discuss the matter with the appropriate level of management and those charged with governance. The auditor may also need to perform additional procedures to obtain sufficient evidence to determine the impact on the financial statements. If management or those charged with governance do not take appropriate action to address the fraud, the auditor may need to consider withdrawing from the engagement or issuing a modified audit opinion.

If the Auditor Discovers Information Indicating a Material Misstatement Due