When the Auditor Knows That an Illegal Act Has Occurred

question 44

Multiple Choice

When the auditor knows that an illegal act has occurred, the first course of action by the auditor is to:

• A) withdraw from the engagement.
• B) issue an adverse opinion.
• C) consider the effects on the financial statements, including the adequacy of disclosure.
• D) not report it to the proper governmental authorities.

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Definitions:

Anxiety

A mental health condition characterized by feelings of worry, anxiety, or fear that are strong enough to interfere with one's daily activities.

Gasping

An involuntary intake of air through the mouth, often as a reflex action due to surprise, shock, or the need for more oxygen.

Sleep Apnea

A disorder characterized by pauses in breathing or periods of shallow breathing during sleep, leading to disrupted sleep and other health complications.

Narcolepsy

A sleep disorder characterized by excessive daytime sleepiness, sleep attacks, and sudden loss of muscle tone.