The most difficult type of misstatement to discover is fraud that is concealed by:
A)Over-recording the transactions
B)Nonrecorded transactions
C)Recording the transactions in subsidiary records
D)Related parties

Question

Quizplus · Accepted Answer

Nonrecorded transactions are the most difficult type of misstatement to detect because they do not leave any audit trail for the auditor to follow. Fraudsters can easily omit recording certain transactions or conceal them in other accounts to make it harder for auditors to detect the fraud. Over-recording or recording transactions in subsidiary records can usually be resolved by tracing them back to the original source documents, and related party transactions can be identified through the use of related party confirmations and other procedures.

The Most Difficult Type of Misstatement to Discover Is Fraud