Question

Which of the following is most likely to be an overall response to fraud risks identified in an audit?

(1)Supervise members of the audit team less closely and rely more upon judgment.
(2)Use less predictable audit procedures.
(3)Use only certified public accountants on the engagement.
(4)Place increased emphasis on the audit of objective transactions rather than subjective transactions.

Answer 1

The most likely overall response to fraud risks identified in an audit is to supervise members of the audit team less closely and rely more upon judgment.

Step-by-step explanation:

The most likely overall response to fraud risks identified in an audit would be to (1) supervise members of the audit team less closely and rely more upon judgment. This is because increased supervision can help prevent and detect fraudulent activities. By relying more on the judgment and expertise of the audit team members, the audit can better identify and address fraud risks.

Using less predictable audit procedures (2) would not be a recommended response to fraud risks. It is important to establish strong and consistent procedures to detect and prevent fraud.

Using only certified public accountants on the engagement (3) would also not be the most likely response. While having certified accountants is important, fraud detection and prevention is not solely dependent on their certification status.

Lastly, placing increased emphasis on the audit of objective transactions rather than subjective transactions (4) may not be the most effective response. Both objective and subjective transactions can be susceptible to fraud, and a comprehensive approach that considers both types is necessary.