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    Question

    An auditor finds management has overridden controls,

    leading to possible material misstatements. As per SA 240, what should the auditor do?
    A Ignore if fraud is minor Correct Answer Incorrect Answer
    B Report to shareholders only Correct Answer Incorrect Answer
    C Perform extended audit procedures Correct Answer Incorrect Answer
    D Resign from audit Correct Answer Incorrect Answer

    Solution

    SA 240 mandates extended testing if fraud risks increase due to management override.

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