The auditor should plan the audit of the revenue business process with the following presumption
A)that there is a risk of material misstatement due to fraud relating to revenue recognition.
B)that professional skepticism is necessary to find misstatements.
C)that evidence gathering and planning the audit require a questioning mind.
D)that the general environment or tone in the company may allow management to rationalize committing fraud.

Question

Quizplus · Accepted Answer

Revenue recognition is a high-risk area for fraud, and the auditor should plan the audit with the presumption that there is a risk of material misstatement due to fraud relating to revenue recognition. This presumption requires the auditor to pay close attention to the revenue recognition policies and procedures, evaluate the risks associated with them, and perform sufficient testing to detect any material misstatements that may exist.

The Auditor Should Plan the Audit of the Revenue Business