How must an auditor address fraud in the planning stage?

Question

Quizplus · Accepted Answer

The auditor must consider the likelihood of fraud existing in the company in the planning stage. This is because fraud risk assessment is a critical initial step in planning the audit, and the auditor should use professional skepticism to identify and assess fraud risks. The auditor should evaluate the company's internal control systems, understand the company's operations, and determine the likelihood of fraud based on past experiences or industry trends. The auditor should then design the audit procedures based on the level of fraud risk identified.

How Must an Auditor Address Fraud in the Planning Stage