Facts that warn an auditor that fraud may be occurring can also inform the auditor's judgments on client acceptance and continuance.

Question

Quizplus · Accepted Answer

Facts that indicate potential fraud may be a red flag to the auditor during client acceptance and continuance evaluations. This can include considerations of the client's integrity, ethical climate, and the risk of fraud in the industry or economic environment. The auditor may decide to decline or discontinue the engagement if the risk of fraud is high or if management is not committed to addressing potential fraud risks.

Facts That Warn an Auditor That Fraud May Be Occurring