What should auditors consider when responding to assessed levels of fraud risk?

When responding to assessed levels of fraud risk, assigning appropriate personnel is crucial. This choice emphasizes the importance of having team members with the right skills and experience to address areas of heightened risk effectively. Skilled personnel are vital in detecting potential fraud indicators, understanding the nuances of specific transactions or business areas prone to fraud, and employing specialized audit techniques necessary for thorough investigation.

In cases of higher fraud risk, auditors might need professionals who have a deeper understanding of fraud schemes or forensic auditing, which can greatly enhance the effectiveness of the audit. The right team composition helps ensure that audit procedures are adequately tailored to address the specific risks identified during the planning phase.

While understanding the audit budget is necessary for resource allocation, it is not directly linked to responding to fraud risk. Reducing the scope of the audit can lead to oversight of critical areas and increase the potential for undetected fraud. Conducting interviews solely with management might provide a limited perspective, as it may not reveal underlying issues or corroborate management's assertions; involving other personnel can lead to a more comprehensive understanding of risk factors. Thus, assigning appropriate personnel stands out as the most effective and necessary response to managing assessed levels of fraud risk in an audit setting.