ACCA AA · Chapter 7 · Question 2 of 8
Which of the following does ISA 240 require the auditor to presume is a risk of material misstatement due to fraud, unless rebutted?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Fraud risks in revenue recognition
Explanation
ISA 240 contains a rebuttable presumption that there are risks of fraud in revenue recognition, and the auditor must document reasons if it is rebutted. The risk of management override of controls is also always treated as a significant risk and cannot be rebutted.
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