Question

An auditor detects unusual journal entries passed at month-end involving revenue accounts, without supporting documents. Management explains they are “year-end adjustments.” According to SA 240 (Fraud), what should be the auditor’s response?

A Accept explanation and move on.
B Obtain sufficient audit evidence about authenticity, considering risk of management override.
C Ignore since balances match overall revenue.
D Qualify audit opinion immediately.
E Escalate directly to regulators.
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