Final Answer:
When fraud is discovered, auditors should gather sufficient appropriate evidence to support their conclusion. Option C is correct.
Step-by-step explanation:
When fraud is detected, auditors must follow a stringent process. Initially, they collect comprehensive evidence to substantiate their findings. This step is crucial as it forms the basis for any subsequent actions or reports. Once evidence is gathered, auditors assess the situation's magnitude and impact. While they do have a responsibility to report the fraud, this decision isn't made immediately.
Instead, they weigh the implications, determine the amounts involved, and then decide whether to report it to the appropriate authorities or management. Auditors have a duty to maintain objectivity and professionalism throughout this process, ensuring accurate documentation of their findings and maintaining confidentiality until a course of action is agreed upon.
So, while fraud detection triggers a response, the immediate focus is on evidence collection to substantiate the claim before determining the appropriate reporting or management actions.
Correct Answer: C. Auditors gather sufficient appropriate evidence to support their conclusion.