An Auditor Suspects Its Client Is Committing Illegal Acts That

question 7

Essay

An auditor suspects its client is committing illegal acts that will have a material impact on its financial statements.What is the auditor legally required to do and under what circumstances would the auditor directly notify the SEC?

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Definitions:

Degrees of Freedom

The number of values in the final calculation of a statistic that are free to vary.

Qualitative Variables

Variables that express qualitative attributes and differentiate by category, not in numerical terms.

Chi-Square Test

A nonparametric test used to determine if there is a significant association between two categorical variables.

Sampling Distribution

The probability distribution of a given random-sample-based statistic if you repeatedly sample from the same population.