25. Which of the following fraud testing procedures is not required to be perfor

Question

25. Which of the following fraud testing procedures is not required to be performed in every audit? a. Review the management's accounting estimates for biases that could result in material misstatement due to fraud. b. Evaluate and understand the management's rational for significant accounting transactions that could suggest fraudulent financial reporting. fraud. result in fraudulent financial reporting. c. Examine inappropriate or unauthorized journal entries for evidence of possible misstatement due to d. Investigate problematic or unusual relationships between the auditor and management that could

Explanation / Answer

Answer: d

Such relationship may lead to fraudulent act; but this should not be examined every time; rather, the relationship between the auditor and management should be investigated at the very beginning. Once the relationship is understood it is assumed to be continued in future too.

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