The auditors' responsibility to communicate findings with respect to fraud can best be summarized as:
A) Communicate to the audit committee the existence of fraud but not the amount involved
B) Communicate to the appropriate level of management both material and immaterial amounts of fraud that are detected
C) Communicate to the SEC the existence of fraud but not the amount involved
D) Communicate to the SEC both material and immaterial amounts of fraud that are detected

Question

Quizplus · Accepted Answer

The auditors' responsibility is to communicate fraud findings to the appropriate level of management, which is usually senior management or those charged with governance. This includes both material and immaterial amounts of fraud that are detected during the audit. It is not necessary to communicate the existence of fraud to the audit committee, as they would be included in the appropriate level of management. The auditors are not required to communicate the existence of fraud to the SEC, but if they choose to report the matter to the SEC, they would need to include both material and immaterial amounts of fraud that are detected.

The Auditors' Responsibility to Communicate Findings with Respect to Fraud