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:

Difference Threshold

The minimum difference in stimulation needed to detect a change or difference between two stimuli.

Just-noticeable Difference

The smallest change in intensity of a stimulus that can be detected.

Absolute Threshold

The minimum intensity of a stimulus at which it can be detected by an individual at least 50% of the time.

Difference Threshold

The minimum difference in stimulation that a person can detect 50% of the time, also known as just noticeable difference (JND).