Question

Which of the following is not an inherent limitation in an auditor's ability to detect material misstatements relating to a client's compliance with laws and regulations?

a. Laws and regulations often relate to operational issues within the entity that do not necessarily relate to the financial statements, so the information systems relating to financial reporting may not capture noncompliance.

b. The legal implications of noncompliance are ultimately a matter for legal authorities to resolve, and are not a matter about which the auditor can resolve.

c. Management may act to conceal noncompliance, or may override controls, or may intentionally misrepresent facts to the auditor.

d. Auditors are not required to consider the applicable legal and regulatory frameworks that apply to the entity.

Answer 1

The correct answer is d. Auditors are not required to consider the applicable legal and regulatory frameworks that apply to the entity.

Step-by-step explanation:

The correct answer is d. Auditors are not required to consider the applicable legal and regulatory frameworks that apply to the entity.

While auditors are responsible for detecting material misstatements in a client's financial statements, they are not specifically required to consider the client's compliance with laws and regulations.

This means that auditors may not have a comprehensive understanding of all the legal and regulatory requirements that could lead to noncompliance. However, auditors may still uncover instances of noncompliance during their audit procedures.

Therefore, the correct answar is d. Auditors are not required to consider the applicable legal and regulatory frameworks that apply to the entity.