Question

If the auditor determines that a material misstatement may be due to fraud, the auditor should do all of the following except:

A) Attempt to obtain evidence to determine whether the misstatement was, in fact, due to fraud.
B) Discuss the findings with an appropriate level of management.
C) Alert the authorities.
D) Suggest that management consult with legal counsel

Answer 1

If the auditor determines that a material misstatement may be due to fraud, they should attempt to obtain evidence, discuss the findings with management, and suggest legal counsel. However, they should not alert the authorities themselves.

Step-by-step explanation:

When an auditor determines that a material misstatement may be due to fraud, there are several actions they should take. These include attempting to obtain evidence to determine whether the misstatement was, in fact, due to fraud, discussing their findings with an appropriate level of management, and suggesting that management consult with legal counsel. However, the auditor should not alert the authorities themselves. Instead, this responsibility typically falls to management or those in charge of governance.