An Auditor Who Discovers That Client Employees Have Committed an Illegal

question 2

Multiple Choice

An auditor who discovers that client employees have committed an illegal act with material consequences on the financial statements is most likely to seek legal advice and consider withdrawing from the engagement if

• A)The illegal act is a violation of generally accepted accounting principles.
• B)The client does not take appropriate action after being informed about the illegal act.
• C)The illegal act was committed during a prior year that was not audited.
• D)The auditor has already assessed control risk at the maximum level.

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Definitions:

Destinations

The intended end points or locations where goods or travelers are headed.

Degeneracy

In operations research, this refers to a situation where a linear programming problem has more than one optimal solution path, possibly leading to an indefinite number of solutions.

Transportation Problem

A type of optimization and allocation problem in which goods are to be delivered from several suppliers to several consumers at the lowest cost.

Filled Cells

In spreadsheet or database management, this refers to cells that have data entered in them, as opposed to being blank.