When the auditor suspects that fraud may be present, he or she should:
A) continue with the original planned audit procedures.
B) inform ASIC.
C) obtain additional evidence to determine whether material fraud has occurred.
D) immediately resign from the engagement.

Question

Quizplus · Accepted Answer

When fraud is suspected, the auditor should obtain additional evidence to determine whether material fraud has occurred. This could involve updating the fraud risk assessment, obtaining corroborative evidence from third parties, or engaging forensic specialists to investigate further. However, the auditor should not jump to conclusions or make accusations prematurely, as this could damage the company's reputation and undermine the audit process. The auditor should also consider the implications for the audit opinion and whether a qualified or adverse opinion is necessary if material fraud is found to have occurred. Reporting suspected fraud to ASIC may also be required in certain circumstances, but this should be done after sufficient evidence has been obtained and verified. Simply continuing with the original planned audit procedures or resigning from the engagement without further investigation is unlikely to be sufficient to deal with suspected fraud.

When the Auditor Suspects That Fraud May Be Present, He