An Auditor May Be Required to Disclose Fraud Outside the Client

question 34

Multiple Choice

An auditor may be required to disclose fraud outside the client entity in each one of the following situations except:

• A) in response to a court subpoena.
• B) to the SEC when the auditor has withdrawn from the engagement.
• C) to a successor auditor who makes inquiries in accordance with professional standards.
• D) to the GAO when the auditor has reported illegal acts to the audit committee.
• E) to a funding agency in accordance with audit requirements for entities that receive governmental financial assistance.

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Definitions:

Expected Proportion

The predicted likelihood of an event occurring in a specific category or group.

Dependent

In statistics, referring to a variable that is assumed to depend on or be caused by another (independent) variable.

Come-Out Roll

The initial roll of the dice in a round of craps that determines the point or results in a win or loss for bets on the "Pass" and "Don't Pass" lines.

Immediate Loss

The loss recognized or experienced without delay upon the occurrence of a specific event.