Exam CFE-Fraud-Prevention Topic 1 Question 69 Discussion

Actual exam question for ACFE's CFE-Fraud-Prevention exam
Question #: 69
Topic #: 1

Which of the following is TRUE regarding International Standard on Auditing (ISA) 240?

A. ISA 240 requires auditors to effectively raise awareness about the risk of fraud within the audited organization. B. ISA 240 establishes standards regarding the auditor's responsibility to consider fraud in an audit of financial statements. C. ISA 240 establishes auditors as being primarily responsible for the prevention and detection of fraud within an organization. D. ISA 240 creates requirements for management regarding the establishment of a holistic fraud risk management program.

Suggested Answer: B Vote an answer

ISA 240 (The Auditor's Responsibilities Relating to Fraud in an Audit of Financial Statements) outlines the auditor's responsibility to assess and respond to the risk of material misstatement due to fraud. It does not impose a primary responsibility for fraud prevention and detection upon auditors--that responsibility lies with management (eliminating C). The standard also does not require auditors to actively raise fraud awareness within the organization (eliminating A), nor does it establish requirements for fraud risk management programs for management (eliminating D).

by Tracy at Jul 09, 2026, 11:22 PM

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