CAF-8 · Chapter 15 · Question 4 of 10
After the financial statements have been formally issued to the public, the auditor discovers a massive fraud that existed at year-end which would have changed the audit opinion. What is the auditor's first step?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Discuss the matter with management and determine if the financial statements need amending.
Explanation
Even after issuance, if the auditor discovers facts that existed at the report date that would have changed the opinion, they must discuss it with management, assess if amendment is needed, and inquire how management plans to address it.
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