What is the best method an auditor may use to detect fraud in the financial statements of clients?
A)Use professional skepticism.
B)Understand and properly apply Generally Accepted Accounting Standards.
C)Brainstorm with the client to find the types of fraud occurring.
D)Actively search for all errors in the financial statements.

Question

Quizplus · Accepted Answer

Using professional skepticism means maintaining a questioning mind and not accepting everything at face value. This can help auditors detect inconsistencies and anomalies that may indicate fraud in the financial statements.

Answer: B
 Understanding and properly applying Generally Accepted Accounting Standards (GAAS) is essential for an auditor in detecting fraud. Gaining knowledge of GAAS helps to identify fraud indicators that may appear in the financial statements.

Answer: C and D are incorrect
 Brainstorming with the client may not necessarily help in detecting fraud as clients are often not willing to provide information that may incriminate them. Actively searching for all errors is also not an effective methodology for detecting fraud as the focus is on errors rather than fraudulent activities.

What Is the Best Method an Auditor May Use to Detect