Which of the Following Statements Best Describes the Auditor's Responsibility

question 31

Multiple Choice

Which of the following statements best describes the auditor's responsibility with respect to illegal acts that do not have a material effect on the client's financial statements?

• A) Generally, the auditor is under no obligation to notify parties other than personnel within the client's organization.
• B) Generally, the auditor is under an obligation to inform the PCAOB.
• C) Generally, the auditor is obligated to disclose the relevant facts in the auditor's report.
• D) Generally, the auditor is expected to compel the client to adhere to requirements of the Foreign Corrupt Practices Act.

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Definitions:

Equity Securities

Financial instruments like stocks that represent ownership interest in a company or rights to acquire such an interest.

Insignificant Influence

A situation where an investor does not have enough impact on a business to affect its decisions or policies.

Dividend Revenue

Income received from owning shares in a company which distributes a portion of its earnings to its shareholders.

Insignificant Influence

A term describing an investor's lack of power to affect the operating and financial policies of the investee company.