ACCA AA · Chapter 7 · Question 4 of 8
Which of the following procedures does ISA 240 require the auditor to perform in response to the risk of management override of controls?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Testing the appropriateness of journal entries recorded in the general ledger
Explanation
Because management override can occur in unpredictable ways, ISA 240 requires the auditor to test journal entries and other adjustments, review accounting estimates for bias, and evaluate the business rationale of significant unusual transactions. The other procedures may be relevant to specific areas but are not the required responses to override.
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- Q1Under ISA 240, who has primary responsibility for the prevention and detection of fraud?
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