Lark & Co Dec 11 (Kaplan new kit pg 68)

Re. Part ai) of the Q – Fraud

required: assess the ethical & professional issues raised by client’s request to investigate the alleged fraudulent activity

Given that recent audit was conducted by our firm issuing an unmodified opinion (given in question)

Query: I reasoned that one issue raised would be that if the fraud is proved & is likely to be material (it was indicative that it was) our firm may be questioned for auditor’s liability since it wasn’t detected in our latest audit and we gave a reasonable assurance that the FS are free form MM whether caused by fraud & error.

In the answer none of this was mentioned. Is it that irrelevant to point it out?

ty