Question
During audit of XYZ Ltd., the auditor noted that the management concealed certain pending litigations that could affect profitability. However, the CFO insisted it was not material. The auditor suspects deliberate omission. Under SA 200 and SA 240, what should the auditor do?
Solution
As per SA 240, if there is a suspicion of fraud or material misstatement, the auditor must enhance audit procedures and consider modifying or qualifying the opinion.
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