Question 19If an auditor believes that a misstatement might be intentional and the effect on the financial statements could be material the auditor should do which of the following? Resign from the engagement Discuss with the audit committee what should be done to prevent possible future future misstatements. Perform additional procedures to obtain additional evidence to determine whether fraud has occurred or is likely to have occurred and whether there is a material impact on the financial statements. Contact local authorities.

c) If the auditors prepare the procedure and if check whether the fraud have taken place or going to happen by looking into the audit evidences, this will be considered as a better way to keep a check on the misstatements because here, auditor is keeping a personal check in this case.a) Resign from the engagement is not considered as a proper way to identify the misstatement, as auditor is not able to check the misstatements in the financial statements. b) Discussions in the audit committee is not likely to remove the misstatements as discussions alone can't help to remove problems from its base. So, correct option is c. Perform additional procedures to obtain additional evidence to determine whether fraud has occurred or is likely to have occurred and whether there is a material impact on the financial statements.

Answered: If an auditor believes that a…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question 19

If an auditor believes that a misstatement might be intentional and the effect on the financial statements could be material the auditor should do which of the following?

		Resign from the engagement
		Discuss with the audit committee what should be done to prevent possible future future misstatements.
		Perform additional procedures to obtain additional evidence to determine whether fraud has occurred or is likely to have occurred and whether there is a material impact on the financial statements.
		Contact local authorities.

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