The major emphasis in GAAS related to consideration of fraud in a financial statement audit (AU 240)is on:
A) Employee misappropriation of assets.
B) Management fraud.
C) Client fraud on customers.
D) Employee embezzlement.

Question

Quizplus · Accepted Answer

The major emphasis in GAAS related to consideration of fraud in a financial statement audit (AU 240) is on management fraud, which involves intentional misrepresentation or omission of information in the financial statements by those charged with governance, high-level executives, or other employees that can result in a material misstatement. While employee misappropriation of assets and embezzlement are also forms of fraud that could impact the financial statements, they are not the main focus of AU 240. Client fraud on customers is also not directly related to the financial statement audit process.

The Major Emphasis in GAAS Related to Consideration of Fraud