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Which of the following statements is true regarding an accountant's consideration of fraud/illegal acts in compilation and review engagements?
Suggested Answer: B
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Choice 'b' is correct. A report on internal control related matters noted in an audit should not state that there are no significant deficiencies in internal control, since this statement might erroneously imply that the auditor searched for such conditions.
Choice 'a' is incorrect. The auditor is permitted to state that no material weaknesses were identified during the audit. Typically this occurs in reports submitted to governmental authorities.
Choice 'c' is incorrect. The auditor may suggest that corrective follow-up action should be taken due to the relative significance of material weakness discovered.
Choice 'd' is incorrect. The auditor's report may state that his or her consideration of internal control would not necessarily disclose all significant deficiencies that exist.
41 comments · newest first
DO
Dolores
11 months ago
D makes sense, better safe than sorry!
JO
Jonell
11 months ago
B is misleading, they only need to report certain things.
RE
Rebbecca
11 months ago
Wait, so they don't have to report suspicions? That seems off.
WE
Wendell
11 months ago
Totally agree, it's all about the level of engagement!
LA
Lashaunda
12 months ago
A is correct, no obligation to detect fraud in compilations.
LA
Lasandra
12 months ago
I’m leaning towards option D because it seems important to report any indications of fraud, but I’m not 100% confident. I need to double-check my notes on this.
NO
Norah
12 months ago
I’m a bit confused about option C. I thought accountants had to report any signs of fraud, not just definite instances.
SA
Sage
1 year ago
I feel like I’ve seen a question like this before, and I think option B might be the right answer. It makes sense that management should be informed about fraud.
FR
Freeman
1 year ago
I think option A sounds familiar, but I’m not entirely sure if it’s correct. I remember something about the accountant's responsibilities in these engagements.
BE
Benton
1 year ago
I'm a little confused by this question. Telephony, email, and the camera all seem like they could be useful features for a navigation app, but I'm not sure which one is the most important. I'll have to weigh the pros and cons of each option.
MA
Madonna
1 year ago
Okay, I think I've got this. The key is to configure the Extract process with the FORMATASCII SQLLOADER option to generate the non-canonical extract file.
MI
Mitzie
1 year ago
I'm a little confused by this question. I know protocol analyzers are used for network troubleshooting, but I'm not sure how the specific options relate to that. I'll have to guess on this one.
DI
Dino
1 year ago
I remember practicing a question similar to this, and I also thought it was the project management plan. Just makes sense since it's all about managing resources and contracts.
EL
Ellen
1 year ago
This question is a real 'accounting' for your actions, am I right? *wink wink* Anyway, D is the clear winner here.
GE
Gennie
1 year ago
Yes, D is the best choice. It's crucial to communicate any suspicions of fraud or illegal acts to the appropriate level of management.
LA
Lamonica
1 year ago
Definitely, D is the way to go. We have to make sure management is aware of any potential issues.
BE
Benedict
1 year ago
I agree, D is the correct answer. It's important to report any indication of fraud or illegal acts to management.
CA
Cassie
1 year ago
Option B sounds a bit too broad. I mean, do they really have to report every single instance, even the super minor ones? D is the way to go.
WH
Whitney
1 year ago
I think D strikes a good balance in reporting potential fraud or illegal acts without overwhelming management with minor instances.
EL
Elfriede
1 year ago
Yeah, reporting every single instance of fraud or illegal acts could be overwhelming. D is more practical.
RO
Roy
1 year ago
I agree, option B does seem like a lot of work. D seems more reasonable.
LO
Lonny
1 year ago
Hmm, I don't think the accountant can just ignore everything and wait for the fraud to come to them. Gotta go with D on this one.
LE
Leonida
1 year ago
Wait, so the accountant doesn't have to do anything to detect fraud or illegal acts? That's like asking a detective to solve a crime without investigating. Definitely not A.
GE
German
1 year ago
D) Information indicating that fraud or an illegal act may have occurred should be reported in writing to an appropriate level of management.
AU
Audry
1 year ago
C) The accountant must report only definite instances of fraud or an illegal act, but need not report information indicating that fraud or an illegal act may have occurred.
JU
Juliann
1 year ago
B) The accountant must inform an appropriate level of management of all instances of fraud or illegal acts.
PE
Peter
1 year ago
Yes, information indicating that fraud or an illegal act may have occurred should be reported in writing to management. That's option D.
CH
Christiane
1 year ago
But the accountant doesn't have to report every instance of fraud or illegal acts, only definite ones. So, it's not B.
CO
Cornell
1 year ago
Right, the accountant must inform management of all instances of fraud or illegal acts. That's option B.
AN
Anisha
1 year ago
No, the accountant is not required to perform procedures to detect fraud or illegal acts. So, it's not A.
AN
Antonio
1 year ago
But why do you think that? I thought we only need to report definite instances of fraud.
NI
Nicolette
1 year ago
I disagree, I believe the answer is D.
AN
Antonio
1 year ago
I think the answer is A.
LO
Lorrine
1 year ago
But why do you think that? I thought the accountant must report all instances of fraud or illegal acts.
TA
Talia
1 year ago
I disagree, I believe the answer is D.
LO
Lorrine
2 years ago
I think the answer is A.
DA
Dalene
2 years ago
I'm pretty sure the accountant has to report any potential fraud or illegal acts, not just the definite ones. Option D seems to be the most accurate answer here.
LO
Loren
1 year ago
I agree, it's important for accountants to report any indications of fraud or illegal acts to management.
GE
Georgeanna
1 year ago
That's true, but I believe option D is more specific about reporting potential fraud or illegal acts.
CA
Cathern
1 year ago
But what about option A? It says the accountant is not required to detect material misstatements due to fraud or illegal acts.
AL
Aleta
1 year ago
I think you're right, option D does seem to be the most accurate answer.