The major emphasis in GAAS related to consideration of fraud in a financial statement audit (AU-C 240) is on:
A)employee misappropriation of assets.
B)management fraud.
C)client fraud on customers.
D)employee embezzlement.

Question

Quizplus · Accepted Answer

The major emphasis in GAAS related to consideration of fraud in a financial statement audit (AU-C 240) is on management fraud, which involves intentional misleading or misrepresenting financial statements by the management of the client. While employee misappropriation of assets and embezzlement are types of fraud that should also be considered, they are not the main focus of AU-C 240. Client fraud on customers is also not relevant to the audit of financial statements, as it involves fraud committed by the client on its customers, who are external to the client's financial reporting process.

The Major Emphasis in GAAS Related to Consideration of Fraud