The major emphasis in GAAS related to consideration of fraud in a financial statement audit (AU 240)is on
A)employee misappropriation of assets.
B)management fraud.
C)client fraud on customers.
D)employee embezzlement.

Question

Quizplus · Accepted Answer

GAAS related to consideration of fraud in a financial statement audit (AU 240) places major emphasis on management fraud. This can include intentional misrepresentation or omission of information in financial statements to deceive stakeholders. The auditor must consider the risk of management fraud and design procedures to detect any material misstatements caused by it. While employee misappropriation of assets and embezzlement are also types of fraud, they are not the major emphasis of this standard. Client fraud on customers is not directly related to the financial statement audit and is therefore not a focus of AU 240.

The Major Emphasis in GAAS Related to Consideration of Fraud