Which of the following statements reflects an auditor's responsibility for detecting fraud?
A)An auditor is not responsible for discovering fraudulent acts involving employee collusion.
B)The audit should be planned to detect only fraud caused by departures from GAAP.
C)An auditor is only responsible for detecting fraudulent financial reporting.
D)An auditor should design the audit to provide reasonable assurance of detecting errors and fraud that are material to the financial statements.

Question

Quizplus · Accepted Answer

According to auditing standards, an auditor has a responsibility to design the audit to provide reasonable assurance of detecting errors and fraud that are material to the financial statements. This includes both fraudulent financial reporting as well as misappropriation of assets, and the auditor should consider the risk of material fraud when planning the audit. While detecting collusion among employees can be challenging, the auditor still has a responsibility to assess the risk of fraud and perform procedures to detect or prevent it to a reasonable extent. Therefore, option D is the most appropriate statement.

Which of the Following Statements Reflects an Auditor's Responsibility for Detecting