[Anonymous]

In connection with the financial statements, an independent auditor could be responsible for failure to detect a material fraud if:

A Statistical sampling techniques were not used on the audit engagement.

B Accountants performing the important parts of the work failed to discover a close relationship between the treasurer and cashier.

C The auditor planned the audit in a negligent manner.

D The fraud was perpetrated by one employee who circumvented the existing internal controls.

Ans is C, my question is why cant it be D? or is this just a stupid question?

[barelystayingsane]

Another thing: the auditor is NOT a guarantor that the financial statements are free of misstatement. It is not practical or possible to obtain assurance beyond all doubt. I don't know how else to explain this. This may just need to be a fact nugget that you memorize.

[CPAsweetness]

Hey, cpa_man.

In Answer D, I think the give away is “circumvented.” That is more of an inherent limitation which is hard to detect by the auditor. It's just a tricky question in my opinion. An auditor is only responsible for an error if there is some kind of a negligent act.

I am an auditor, and had I hard time passing this exam because of the trickiness of it. I had to do a lot of practice questions with Wiley so I could learn how the exam uses these tricks! One little word can change the whole meaning to a question and lead you to the wrong answer.

While I am thinking about it, one technique I used when answering questions was read from D to A. It helped me to not jump to a conclusion about an answer.

[CPAsweetness]

Hey, cpa_man.

In Answer D, I think the give away is “circumvented.” That is more of an inherent limitation which is hard to detect by the auditor. It's just a tricky question in my opinion. An auditor is only responsible for an error if there is some kind of a negligent act.

I am an auditor, and had I hard time passing this exam because of the trickiness of it. I had to do a lot of practice questions with Wiley so I could learn how the exam uses these tricks! One little word can change the whole meaning to a question and lead you to the wrong answer.

While I am thinking about it, one technique I used when answering questions was read from D to A. It helped me to not jump to a conclusion about an answer.

[Author]

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