Auditing standards have historically reflected an expectation that auditors will detect and report every instance of material fraud.

Question

Quizplus · Accepted Answer

While auditors are required to obtain reasonable assurance that financial statements are free from material misstatements, including those resulting from fraud, auditing standards recognize that it may not be possible for auditors to detect every instance of material fraud. Therefore, the focus is on obtaining sufficient evidence to assess the risk of material misstatement due to fraud and designing procedures that are likely to detect material misstatements. Auditors are also required to communicate any observed or suspected fraud to management or those charged with governance.

Auditing Standards Have Historically Reflected an Expectation That Auditors Will