Audits of financial statements are valuable to the detection of fraud because:
A)Auditors are not required to seek out and find all fraud.
B)Auditors expect that management will make them aware of any fraud in the financial statements.
C)Society expects that the auditor will ensure that financial statements have not been materially misstated due to fraud.
D)Society realizes that some fraud is not capable of being discovered by auditors.

Question

Quizplus · Accepted Answer

Audits of financial statements are valuable to the detection of fraud because society expects that the auditor will ensure that financial statements have not been materially misstated due to fraud. While auditors are not required to seek out and find all fraud, they do have a responsibility to detect material misstatements in financial statements due to fraud. Additionally, auditors cannot rely solely on management to disclose any fraud, as management may intentionally or unintentionally fail to do so. While it is true that some fraud may not be capable of being discovered by auditors, this does not negate the importance of an audit in detecting and deterring fraud.

Audits of Financial Statements Are Valuable to the Detection of Fraud