In planning the audit,members of the audit team are required to have a team meeting to discuss the potential for misstatement due to fraud in the inventory process,including
A)the pressure on management to commit fraud
B)the inevitability that fraud will be perpetuated in the company
C)the general tone or environment in the company that may allow management to conceptualize committing fraud
D)the general tone or environment in the company that may allow management to rationalize committing fraud
E)the rationalization for fraud to be perpetrated in the company
F)both A and D
G)both C and E

Question

Quizplus · Accepted Answer

Option F includes two important factors that the audit team should consider when discussing the potential for misstatement due to fraud. The pressure on management to commit fraud (Option A) and the general tone or environment in the company that may allow management to rationalize committing fraud (Option D) are both crucial factors that can lead to fraud in the inventory process. The audit team must discuss and assess these factors to properly plan the audit and identify possible fraud risks in the inventory process.

In Planning the Audit,members of the Audit Team Are Required