ACFE Exam CFE-Fraud-Prevention-and-Deterrence Topic 3 Question 87 Discussion

Actual exam question for ACFE's CFE-Fraud-Prevention-and-Deterrence exam

Question #: 87
Topic #: 3

[All CFE-Fraud-Prevention-and-Deterrence Questions]

During an external audit, the audit team identifies evidence that management has Intentionally manipulated the organization's reported revenue amount However, the amount of the resulting misstatement does not meet the quantitative materiality threshold for the audit. Which of the following is TRUE regarding this situation?

AThe auditors should reconsider the reliability of the audit evidence they have previously obtained.

BThe auditors should assume that all audit evidence collected previously is unreliable and withdraw from the audit engagement.

CThe auditors should only consider the evidence if they can determine that the actions meet the legal definition of fraud.

DThe auditors should regard the misstatement as immatenal to the audit because the omitted amount is less than the quantitative materiality threshold

Show Suggested Answer

Suggested Answer: B

by Tamera at Jul 02, 2024, 04:18 AM

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Charlesetta

5 days ago

Bah, who cares about the legal definition of fraud? These managers are clearly trying to cook the books. The auditors should just slap them with a big fine and call it a day. What a bunch of jokers!

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Javier

1 days ago

We should still report this to the appropriate authorities.

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Magdalene

11 days ago

I think option D is the way to go here. If the misstatement doesn't meet the materiality threshold, then it's essentially immaterial to the audit. The auditors shouldn't get caught up in the drama - they need to stay focused on the big picture.

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Dortha

23 days ago

I believe the auditors should only consider the evidence if they can determine that the actions meet the legal definition of fraud.

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Ben

24 days ago

I agree with Alesia. Even if the misstatement is not quantitatively material, it still raises concerns about management integrity.

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Alesia

26 days ago

I think the auditors should reconsider the reliability of the audit evidence.

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Breana

28 days ago

Hmm, this is a tricky one. The auditors should definitely reconsider the reliability of the evidence they've obtained, but withdrawing from the engagement seems a bit extreme. I'm not sure if they should solely focus on the legal definition of fraud either.

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Haydee

8 days ago

C) The auditors should only consider the evidence if they can determine that the actions meet the legal definition of fraud.

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Earnestine

9 days ago

A) The auditors should reconsider the reliability of the audit evidence they have previously obtained.

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