Question

Under SA 240, the auditor’s responsibility relates to

Q: Answer-Under SA 240, the auditor’s responsibility relates to identifying and assessing risks of material mi...

SA 240 requires professional skepticism and investigation of fraud allegations through targeted procedures before concluding.

identifying and assessing risks of material misstatement due to fraud. If a whistleblower informs the auditor of possible revenue overstatement, what is the auditor’s next step?

A Ignore unless evidence in audit file exists

B Assess the allegation, design further audit procedures, and evaluate the effect on the audit opinion

C Report immediately to shareholders without testing

D Reduce audit fee

E Issue disclaimer opinion directly

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Under SA 240, the auditor’s responsibility relates to

Solution