Rico, an accountant, contracts to conduct an audit for Sushi Restaurants. In performing the audit, Rico fails to detect a Sushi employee's obvious theft of funds from the firm. Rico is most likely
A)liable if a normal audit would have revealed the theft.
B)liable if the accountant failed to issue a qualified opinion with the audit.
C)not liable because a normal audit is not intended to discover fraud.
D)not liable if the theft was due to Sushi's negligence.

Question

Quizplus · Accepted Answer

Rico would be liable if a normal audit, conducted with due diligence and according to standard auditing practices, would have revealed the theft. Audits are designed to review financial records and practices to ensure accuracy and detect fraud or theft, so failing to detect obvious theft indicates a failure in performing the audit properly.

Rico, an Accountant, Contracts to Conduct an Audit for Sushi