In a review engagement, the CPA is not required to detect fraud. However, what things are required of the CPA to do and/or obtain from the client with respect to performing the engagement related to fraud during performance of the review engagement?

Management must tell the CPA everything they know about any fraud though the CPA is under no obligation to inquire of management about fraud.

True

False

The CPA is not required to detect fraud, so no procedures or evidence of any kind is required.

True

False

The engagement letter must state that the CPA is responsible for the prevention and detection of fraud.

Ture

False

If the CPA should become suspicious of activity that appears to indicate that fraud has occurred, the CPA must inform client management of such suspicions.

True

False

Management must represent to the CPA in the management representation letter that if it is managements responsibility to prevent and detect fraud AND indicate knowledge, if any, of any suspected fraud which may have taken place.

True

False

J. Fraud in Review Engagements Summarized First, it is important to remember that the accountant in a review engagement has NO responsibility to prevent or detect fraud. However, there are some procedures and/or components to a review engagement where fraud must be addressed: 1) Engagement letter must include a statement that management is responsible for the prevention and detection of fraud. 2) Engagement letter must say that the engagement cannot be relied upon to detect fraud. It must also state that if the accountant happens to encounter fraud, the accountant will communicate such instances to management. 3) The accountant must inquire of management whether or not management has knowledge of fraud having occurred. 4) The management representation representation letter must contain management's acknowledgement that it is their responsibility to prevent and detect fraud; AND, management's knowledge of any fraud or suspected fraud which may have occurred