Which of the following statements concerning noncompliance by clients is correct?
A)An auditor's responsibility to detect noncompliance that has a direct and material effect on the financial statements is the same as that for errors and frauds.
B)An audit in accordance with generally accepted auditing standards normally includes audit procedures specifically designed to detect noncompliance that has an indirect but material effect on the financial statements.
C)An auditor considers noncompliance from the perspective of the reliability of management's representations rather than their relation to audit objectives derived from financial statement assertions.
D)An auditor has no responsibility for noncompliance that has an indirect effect on the financial statements.

Question

Quizplus · Accepted Answer

The auditor's responsibility to detect noncompliance that has a direct and material effect on the financial statements is the same as that for errors and frauds. This is stated in auditing standard AU-C section 250, which requires auditors to obtain reasonable assurance that the financial statements are free from material misstatement, whether caused by error, fraud, or noncompliance with laws and regulations. The auditor should design audit procedures to detect such noncompliance and report it to those charged with governance.

Which of the Following Statements Concerning Noncompliance by Clients Is