Which of the following is a specific procedural response to a particular fraud risk in an account balance or class of transactions?
A) Exercising more professional skepticism.
B) Carefully avoiding conducting interviews with people in the fraud-rich areas.
C) Performing procedures such as inventory observation and cash counts on a surprise or unannounced basis.
D) Studying management's selection and application of accounting principles more carefully.

Question

Quizplus · Accepted Answer

Performing procedures such as inventory observation and cash counts on a surprise or unannounced basis is a specific procedural response to a particular fraud risk in an account balance or class of transactions. This approach helps to detect and prevent fraud by minimizing the opportunity for manipulation and collusion. Option A (exercising more professional skepticism) is a general approach that should be applied throughout the audit process, but it is not a specific procedural response to a particular fraud risk. Option B (carefully avoiding conducting interviews with people in the fraud-rich areas) is not a recommended approach as interviews may be necessary to gather evidence and uncover fraud. Option D (Studying management's selection and application of accounting principles more carefully) may be useful in identifying potential fraud risks but it is not a specific procedural response.

Which of the Following Is a Specific Procedural Response to a Particular