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Discuss the differences in the auditor's responsibilities for discovering (1) material errors, (2) material fraud (3)...

Discuss the differences in the auditor's responsibilities for discovering (1) material errors, (2) material fraud (3) illegal acts having a direct effect on the financial statements, and (4) illegal acts that do not have a direct effect on the financial statements.

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It is always the responsibility to ensure that the financial statements are free from material misstatements.

Accounting standard in particular does not distinguish between auditor’s responsibility in detecting the errors or frauds.

Auditor should always take extra care with respect to detecting frauds than errors because mostly there will be management involvement and they will try to conceal it. However it is all auditor who have to plan and perform the audit in such a way that financial statements are all free from material misstatements caused by error or fraud.

Auditor responsibility on illegal activities that effect the financials statements will be same as activities causing errors and frauds. However if the illegal activities will not affect the financial statements then the auditor need not emphasis more on that unless he/she have proper evidence that they exist.

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