An auditor discovers a likely fraud during an audit, but concludes that the effect of the fraud is not sufficiently material to affect the auditor's opinion.The auditor should:
A)disclose the fraud to the appropriate level of the client's management.
B)disclose the fraud to appropriate authorities external to the client.
C)discuss with the client the additional audit procedures that will be needed to identify the exact amount of the fraud.
D)modify the audit program to include tests specifically designed to identify the fraud and its impact on the financial report.

Question

Quizplus · Accepted Answer

While the auditor has concluded that the effect of the fraud is not material enough to affect their opinion, they still have a responsibility to report the fraud to the appropriate level of the client's management. This allows the client to take necessary action, investigate further, or implement controls to prevent future occurrences. It is not necessary to disclose the fraud to external authorities or modify audit procedures in this case.

An Auditor Discovers a Likely Fraud During an Audit, but Concludes