Question

Which aspects should be included in the audit documentation related to fraud?

a) Emphasize to the audit team the need to maintain professional skepticism
b) Procedures performed to identify and assess the risks of material misstatement due to error or fraud
c) The nature of the communications about error or fraud made to management
d) Discussions among engagement personnel

Answer 1

The aspects that should be included in the audit documentation related to fraud are emphasizing professional skepticism, documenting risk assessment procedures, and recording communications with management.

Step-by-step explanation:

The aspects that should be included in the audit documentation related to fraud are:

1. Emphasizing to the audit team the need to maintain professional skepticism.
2. Documenting the procedures performed to identify and assess the risks of material misstatement due to error or fraud.
3. Recording the nature of the communications about error or fraud made to management.
4. Documenting any discussions among engagement personnel.

Detailed records of discussions among engagement personnel concerning the risks of material misstatement due to fraud highlight the collaborative approach to tackling fraud risk and heighten the fraud awareness among the audit team.