Which of the following statements describes why a properly designed and executed audit may not detect a material misstatement due to fraud?

Question

Quizplus · Accepted Answer

Choice "A" is correct. A properly designed and executed audit may not detect a material misstatement that is concealed through collusion. The auditor's responsibility is to design audit procedures that can reasonably be expected to detect material misstatements (errors and fraud) in the financial statements. Intentional misstatements that are concealed through collusion, however, are very difficult to detect, and generally the auditor is not responsible to discover them. Choice "B" is incorrect. An audit is designed to provide reasonable assurance of detecting material misstatements (both errors and fraud). Choice "C" is incorrect. If the factors considered in assessing control risk indicated an increased risk of intentional misstatements, a properly designed and executed audit would have taken the increased risk into consideration with additional audit procedures. Choice "D" is incorrect. In a properly designed and executed audit, the auditor would consider factors influencing audit risk for account balances that have effects pervasive to the financial statements taken as a whole.

Which of the Following Statements Describes Why a Properly Designed