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    Question

    An auditor finds material misstatements due to fraud but

    the management refuses to take corrective action. What should be the auditor’s next step?
    A Modify the audit opinion Correct Answer Incorrect Answer
    B Withdraw from audit silently Correct Answer Incorrect Answer
    C Inform the tax department Correct Answer Incorrect Answer
    D Take no further action Correct Answer Incorrect Answer

    Solution

    If fraud is not rectified, the auditor must modify the opinion in accordance with SA 705.

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