A properly planned and performed audit may fail to detect a material misstatement resulting from fraud because
A) Audit procedures that are otherwise effective may be ineffective for fraud that is concealed through collusion.
B) An audit is planned and performed to provide reasonable assurance of detecting material misstatements caused by errors but not by fraud.
C) The factors considered in assessing control risk indicated an increased risk of error but only a low risk of fraud in the financial statements.
D) The auditor did not consider factors influencing audit risk for account balances that have effects pervasive to the financial statements taken as a whole.

Question

Quizplus · Accepted Answer

Collusion between employees or management can be difficult to detect and may allow for fraud to be concealed from the auditor. Even with effective audit procedures, the presence of collusion can make it difficult to detect fraud.

A Properly Planned and Performed Audit May Fail to Detect