If an Auditor Becomes Aware of Information Indicating an Illegal

question 7

Multiple Choice

If an auditor becomes aware of information indicating an illegal act within the company being audited, the auditor must:

• A)determine whether an illegal act occurred and, if it did, the possible effect on the issuer's financial statements.
• B)notify the SEC immediately so it can conduct an investigation.
• C)resign immediately to avoid criminal liability.
• D)notify local law enforcement and remove himself from any association with the company.

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Definitions:

Supply and Demand

The fundamental economic model that describes how prices are determined in a market based on the available quantity of goods or services and the desire for them.

Equilibrium Price

The price at which the supply of an item matches its demand, ensuring that the market is in balance.

Excess Supply

A situation where the quantity of a good or service supplied surpasses the quantity demanded at a specific price.

Excess Demand

Excess demand occurs when the quantity demanded of a product or service at a given price exceeds the quantity supplied, often leading to a shortage.