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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Lorean

1 months ago

Hold up, hold up. Did someone say 'immaterial'? Sounds like the perfect excuse to kick back and enjoy a nice cup of coffee during the audit. As long as the numbers add up, who cares about a little creative accounting, am I right?

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Grover

8 days ago

Ethical standards require accurate and transparent financial information, regardless of materiality thresholds.

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Helga

10 days ago

It's important to maintain integrity in financial reporting, even if the misstatement is not quantitatively material.

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Charlesetta

2 months 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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Shawnda

18 days ago

Maybe the auditors can still report it to the authorities, even if it's not considered material for the audit.

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Jimmie

23 days ago

I agree, it's frustrating when things like this slip through the cracks. But the auditors have to follow the rules.

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Tammi

1 months ago

Yeah, it's definitely shady what they're doing. But if it doesn't meet the materiality threshold, there might not be much the auditors can do.

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Krystina

1 months ago

The auditors need to take action, even if it's not considered fraud.

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Royce

1 months ago

It may not meet the materiality threshold, but it's still unethical.

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Javier

2 months ago

We should still report this to the appropriate authorities.

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Magdalene

2 months 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

2 months 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

2 months 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

2 months ago

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

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Breana

3 months 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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Alease

1 months ago

D) The auditors should regard the misstatement as immaterial to the audit because the omitted amount is less than the quantitative materiality threshold

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Macy

2 months 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.

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Haydee

2 months 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

2 months ago

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

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