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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?
Suggested Answer: B
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38 comments · newest first
AL
Alease
11 months ago
How can they just brush off intentional manipulation? Feels wrong.
BR
Brynn
11 months ago
I think option A makes sense, gotta reconsider the evidence.
AL
Alease
11 months ago
Wait, so they can just ignore it if it's under the threshold? That seems off.
KA
Kattie
12 months ago
I disagree, they should still look into the reliability of the evidence!
JU
Justine
12 months ago
Definitely option D, misstatement is below the threshold.
MA
Marshall
12 months ago
I vaguely recall something about not assuming all evidence is unreliable just because of one issue. So, option B seems too extreme to me.
MA
Malcom
1 year ago
I feel like option D might be too simplistic. Just because the misstatement is below the threshold doesn't mean it should be ignored completely, right?
RU
Ruby
1 year ago
I'm not entirely sure, but I think we practiced a question where the auditors had to consider the implications of fraud, regardless of materiality. That makes me lean towards option C.
MI
Mireya
1 year ago
I remember discussing how auditors need to evaluate the reliability of evidence, especially if there's manipulation involved. So, option A seems like it could be correct.
AU
Audra
1 year ago
I'm not sure about this one. The fact that management intentionally manipulated the revenue is concerning, even if the amount doesn't meet the threshold. I'll need to think this through carefully.
AV
Avery
1 year ago
Ah, this is straightforward. If the misstatement is below materiality, we can just consider it immaterial and move on. No need to overcomplicate things.
SH
Shalon
1 year ago
I've got a strategy - I'll focus on evaluating the reliability of the audit evidence we've collected so far. That should help me determine the best course of action here.
PE
Pearly
1 year ago
Hmm, I'm a bit confused. If the misstatement is below the materiality threshold, can we really ignore it? Seems like there could be more going on that we need to investigate.
DO
Dorinda
1 year ago
This is a tricky one. I'll need to carefully review the evidence and consider the implications, even if the misstatement doesn't meet the materiality threshold.
KI
Kiera
1 year ago
I'm a little confused by this question. There are a lot of different cybercrime laws, and I'm not sure which one would apply in this specific case. I'll have to review my notes and try to reason through the options.
RE
Reyes
1 year ago
Yeah, that's what I was thinking too. The adapter and the desktop agent seem like the logical choices to enable the PCoIP metrics monitoring for the Horizon environment.
YO
Yong
1 year ago
I'm a bit unsure about this one. Modifying the Diagnostics settings feels like it might not be the complete solution. I'll need to double-check the details to make sure I'm not missing anything.
LO
Lorean
1 year 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?
BO
Bok
1 year ago
It's crucial to follow ethical guidelines and report financial information accurately, regardless of materiality thresholds.
LA
Laine
1 year ago
Manipulating revenue figures, even if not material, can still impact the overall credibility of the financial statements.
GR
Grover
1 year ago
Ethical standards require accurate and transparent financial information, regardless of materiality thresholds.
HE
Helga
1 year ago
It's important to maintain integrity in financial reporting, even if the misstatement is not quantitatively material.
CH
Charlesetta
1 year 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!
SH
Shawnda
1 year ago
Maybe the auditors can still report it to the authorities, even if it's not considered material for the audit.
JI
Jimmie
1 year ago
I agree, it's frustrating when things like this slip through the cracks. But the auditors have to follow the rules.
TA
Tammi
1 year 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.
KR
Krystina
1 year ago
The auditors need to take action, even if it's not considered fraud.
RO
Royce
1 year ago
It may not meet the materiality threshold, but it's still unethical.
JA
Javier
1 year ago
We should still report this to the appropriate authorities.
MA
Magdalene
1 year 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.
DO
Dortha
2 years ago
I believe the auditors should only consider the evidence if they can determine that the actions meet the legal definition of fraud.
BE
Ben
2 years ago
I agree with Alesia. Even if the misstatement is not quantitatively material, it still raises concerns about management integrity.
AL
Alesia
2 years ago
I think the auditors should reconsider the reliability of the audit evidence.
BR
Breana
2 years 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.
AL
Alease
1 year ago
D) The auditors should regard the misstatement as immaterial to the audit because the omitted amount is less than the quantitative materiality threshold
MA
Macy
1 year 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.
HA
Haydee
1 year ago
C) The auditors should only consider the evidence if they can determine that the actions meet the legal definition of fraud.
EA
Earnestine
1 year ago
A) The auditors should reconsider the reliability of the audit evidence they have previously obtained.