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      Question

      Auditor discovers numerous round-dollar manual

      adjustments booked post year-end, with treasury head’s sign-off. What's the most appropriate auditor response?
      A Assume rounding errors only Correct Answer Incorrect Answer
      B Increase testing and interview treasury head Correct Answer Incorrect Answer
      C Report to SEBI immediately Correct Answer Incorrect Answer
      D Issue disclaimer Correct Answer Incorrect Answer
      E Accept if immaterial Correct Answer Incorrect Answer

      Solution

      Post balance sheet manual round-dollar adjustments are fraud risk indicators (SA 240). Auditor must expand testing, evaluate appropriateness, and interview responsible personnel before forming an opinion.

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