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

When the auditor suspects fraud, they should obtain evidence, discuss with management, and suggest legal counsel. Alerting authorities is not typically their responsibility.

Step-by-step explanation:

When an auditor determines that a material misstatement may be due to fraud, they are required to take certain actions. These include attempting to obtain evidence to determine whether the misstatement was, in fact, due to fraud, discussing the findings with an appropriate level of management, and suggesting that management consult with legal counsel. However, the auditor is generally not responsible for alerting the authorities directly. This is usually the role of management or law enforcement.