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    Question

    Senior executive enabled a secret fund transfer

    bypassing system controls. Auditor finds unusual executive journal entries. What next step?
    A Continue as planned Correct Answer Incorrect Answer
    B Consult senior auditor and perform extended testing Correct Answer Incorrect Answer
    C Rely on management explanation Correct Answer Incorrect Answer
    D Withdraw Correct Answer Incorrect Answer
    E Report directly to SEBI Correct Answer Incorrect Answer

    Solution

    Overriding controls triggers fraud risk response under SA 240 – escalate and increase audit procedures.

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