The risk of material misstatement due to fraud relating to revenue recognition should be
A)approached in a manner that is identical to control risk assessment.
B)given lower priority to the risk of embezzlement.
C)ordinarily presumed by the auditor.
D)assumed to have been considered by the audit committee.

Question

Quizplus · Accepted Answer

The risk of material misstatement due to fraud relating to revenue recognition is generally considered a significant risk and should be presumed by the auditor, regardless of the control risk assessment. It should be given equal priority to the risk of embezzlement, and the fact that it was considered by the audit committee does not alleviate the auditor's responsibility to evaluate and address this risk.

The Risk of Material Misstatement Due to Fraud Relating to Revenue