An Auditor Who Discovers That Client Employees Have Committed an Illegal

question 651

Multiple Choice

An auditor who discovers that client employees have committed an illegal act that has a material effect on the client's financial statements most likely would withdraw from the engagement if:

• A) The illegal act is a violation of generally accepted accounting principles.
• B) The client does not take the remedial action that the auditor considers necessary.
• C) The illegal act was committed during a prior year that was not audited.
• D) The auditor has already assessed control risk at a high level.

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Definitions:

Job Descriptions

A formal document that outlines the essential responsibilities, qualifications, and duties of a specific job position, serving as a foundation for hiring, performance evaluations, and role clarity.

Organic Structure

An organizational structure characterized by flexibility, decentralization of authority, minimal formal procedures, and encouragement of horizontal communication.

Organizational Structure

The framework that outlines how activities such as task allocation, coordination, and supervision are directed towards the achievement of organizational aims.

Decision Makers

Individuals or groups responsible for making choices that determine the course of actions to be taken.