Final answer:
Auditors may consider changing the timing of audit procedures if they identify risks of material misstatement due to fraud during risk assessment. Confronting employees or reporting to the SEC are not necessarily the immediate steps to be taken.
Step-by-step explanation:
If during risk assessment auditors have identified risks of material misstatement due to fraud, they may consider changing the timing of audit procedures. This modification in timing can allow the auditors to perform additional tests or obtain evidence when it is most pertinent.
For example, they might conduct some audit procedures at period end, rather than at an earlier date, to better identify any fraudulent activities that have occurred throughout the fiscal period. It is worth noting that immediately confronting employees or reporting to the SEC may not be the initial steps.
Auditors typically follow a set process that includes gathering evidence, following their organization's protocols, and, if necessary, reporting findings to the appropriate oversight bodies in accordance with professional and regulatory standards.
Therefore, the correct answer is 2) they may consider changing the timing of audit procedures.