Which of the Following Statements Is Correct Concerning an Auditor's

question 156

Multiple Choice

Which of the following statements is correct concerning an auditor's responsibility to report fraud?

• A) The auditor is required to communicate to those charged with governance all minor fraudulent acts perpetrated by low-level employees, even if the amounts involved are inconsequential.
• B) The disclosure of material management fraud to principal stockholders is required when both senior management and the board of directors fail to acknowledge the fraudulent activities.
• C) Fraudulent activities involving senior management of which the auditor becomes aware should be reported directly to the SEC.
• D) The disclosure of fraudulent activities to parties other than the client's senior management and those charged with governance is not ordinarily part of the auditor's responsibility.

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Definitions:

Research

The systematic investigation into and study of materials and sources to establish facts and reach new conclusions.

Projective Test

A psychological assessment tool that uses ambiguous stimuli to elicit responses that reveal aspects of an individual’s personality.

Thematic Apperception Test

A projective psychological test where individuals are presented with ambiguous pictures and asked to create stories, revealing their underlying motives, feelings, and attitudes.

Validity

Refers to the degree to which a test or instrument measures what it claims to measure.