Fraud requires both a misstatement and the intent to deceive, so choice A is the only option that includes both elements. Choice B includes the misstatement but not the intent to deceive, while choices C and D relate to levels of care in the audit and do not address the intent to deceive.

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Fraud Occurs When

Question 28

Multiple Choice

Fraud occurs when

A) a misstatement is made and there is both knowledge of its falsity and the intent to deceive.
B) a misstatement is made and there is knowledge of its falsity but no intent to deceive.
C) the auditor lacks even slight care in the performance in performing the audit.
D) the auditor has an absence of reasonable care in the performance of the audit.

Correct Answer: