Question

Auditing standards require auditors to make certain inquiries of management regarding fraud. Which of the following inquiries is required?

a) Inquiring about management's philosophy and approach towards fraud
b) Asking if management has committed any fraudulent activities
c) Inquiring about the existence of unrecorded liabilities
d) Asking for the personal financial information of the management

Answer 1

Auditing standards require auditors to make certain inquiries of management regarding fraud, such as inquiring about management's philosophy and approach towards fraud, and the existence of unrecorded liabilities.

Step-by-step explanation:

Auditing standards require auditors to make certain inquiries of management regarding fraud. One of the required inquiries is inquiring about management's philosophy and approach towards fraud. This is important to understand the company's overall attitude and strategy when it comes to fraud prevention and detection.

However, asking if management has committed any fraudulent activities is not a required inquiry. Auditors generally focus on evaluating the processes and controls in place to identify and prevent fraud, rather than asking direct accusations.

Another required inquiry is inquiring about the existence of unrecorded liabilities. This involves asking management if there are any potential liabilities or obligations that have not been properly recorded in the financial statements.

Asking for the personal financial information of management is not a required inquiry as it would be a violation of privacy and outside the scope of auditing standards.