When an Auditor Becomes Aware of a Possible Illegal Act

question 37

Multiple Choice

When an auditor becomes aware of a possible illegal act by a client, the auditor should obtain an understanding of the nature of the act in order to

• A)Evaluate the effect on the financial statements.
• B)Determine the reliability of management's representations.
• C)Consider whether other similar acts may have occurred.
• D)Recommend remedial actions to the audit committee.

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Definitions:

Dependent Variable

A variable in an experiment that is affected by changes in the independent variable.

Influenced

Refers to being affected or altered by an external factor or variable.

Sample Regression Line

This is the line obtained from the regression analysis of sample data, used to predict the dependent variable values from the independent variable.

Dependent Variable

A variable in an experiment or model that is expected to change in response to changes in the independent variable.