Post, CPA, accepted an engagement to audit the financial statements of General Co., a new client. General is a publicly held retailing entity that recently replaced its operating management. In the course of applying audit procedures, Post discovered indicators of fraud. After further investigation, they determined that a warehouse employee was stealing inventory. 1) Discuss fraud materiality thresholds and explain whether the specific fraud case outlined above can be considered inconsequential. 2) Discuss Post's responsibilities regarding required communications if the fraud was determined to be: a) Clearly inconsequential. b) Not clearly inconsequential. 3) Discuss auditor obligations regarding client confidentiality and allowed disclosures relating to fraud.
Post, CPA, accepted an engagement to audit the financial statements of General Co., a new client. General is a publicly held retailing entity that recently replaced its operating management. In the course of applying
1) Discuss fraud materiality thresholds and explain whether the specific fraud case outlined above can be considered inconsequential.
2) Discuss Post's responsibilities regarding required communications if the fraud was determined to be:
a) Clearly inconsequential.
b) Not clearly inconsequential.
3) Discuss auditor obligations regarding client confidentiality and allowed disclosures relating to fraud.
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