The case titled "Expectations for Professional Judgment by Auditors to Detect Fraud" suggests that:
A)Fraud is a common element of audits.
B)Auditors always detect fraud if they follow professional standards.
C)Even an audit in accordance with professional standards can fail to detect a material fraud in the financial statements, particularly where management has gone to great lengths to cover up the fraud.
D)Auditors should not be expected to uncover fraud since management always has the upper hand with respect to financial statement matters.

Question

Quizplus · Accepted Answer

The case suggests that even if auditors follow professional standards, they may still fail to detect material fraud in the financial statements, especially when management has purposefully concealed the fraud. This indicates that option C is the correct answer. The case does not suggest that fraud is a common part of audits or that auditors always detect fraud if they follow professional standards, nor does it imply that auditors shouldn't be expected to discover fraud.  As a result, alternatives A, B, and D are incorrect.

The Case Titled "Expectations for Professional Judgment by Auditors to Detect