If the audit team discovers that fraud risk factors are present on an engagement,it should then:
A)resign from the client and inform the audit committee and regulatory authorities.
B)modify procedures to actively search for the existence of fraud.
C)reduce the amount of evidence required and resort to management inquiry.
D)turn the audit over to forensic accountants.

Question

Quizplus · Accepted Answer

If fraud risk factors are present during an engagement, the audit team should modify procedures to actively search for the existence of fraud. The team should also increase the level of professional skepticism and obtain more persuasive evidence to support their findings. Resigning from the client and informing the audit committee and regulatory authorities should only be considered if management does not take appropriate action to address the fraud risk. Reducing the amount of evidence required and resorting to management inquiry is not a sufficient response to fraud risk factors. And while forensic accountants may be consulted, turning the audit over to them is not necessary unless the fraud is extensive and requires specialized expertise.

If the Audit Team Discovers That Fraud Risk Factors Are