Question

Which of the following statements reflects an auditor's responsibility for detecting fraud?

(1) An auditor is responsible for detecting employee errors and simple fraud, but not for discovering fraudulent acts involving employee collusion or management override.
(2) An auditor should plan the audit to detect fraud caused by departures from GAAP.
(3) An auditor is not responsible for detecting fraud unless the application of auditing standards would result in such detection.
(4) An auditor should design the audit to provide reasonable assurance of detecting errors and fraud that are material to the financial statements.

Answer 1

The correct statement that reflects an auditor's responsibility for detecting fraud is statement (4). Auditors have a responsibility to design the audit to detect errors and fraud that are material to the financial statements.

Step-by-step explanation:

The correct statement that reflects an auditor's responsibility for detecting fraud is (4) An auditor should design the audit to provide reasonable assurance of detecting errors and fraud that are material to the financial statements. Auditors have a responsibility to detect material misstatements in the financial statements, including fraud. They should plan and perform the audit in a way that provides reasonable assurance of detecting errors and fraud that could have a material impact on the financial statements.