An audit failure occurs when
A)A client goes bankrupt or has serious financial difficulty.
B)Auditors fail to conduct the examination in accordance with generally accepted auditing standards,which results in the failure to identify material misstatements in the financial statements.
C)Auditors cannot collect audit fees owed to them by the client.
D)Auditors are sued by a third party.

Question

Quizplus · Accepted Answer

An audit failure occurs when auditors fail to conduct the examination in accordance with generally accepted auditing standards, which results in the failure to identify material misstatements in the financial statements. This can result in misleading financial statements and harm to investors or other stakeholders who rely on the accuracy and completeness of those financial statements. Other options (A, C, and D) may be related to issues that can occur in the audit process, but they do not necessarily constitute an audit failure.

An Audit Failure Occurs When