If, as a Result of Auditing Procedures, an Auditor Believes

question 9

Multiple Choice

If, as a result of auditing procedures, an auditor believes that a client may have committed illegal acts, which of the following actions should be taken immediately by the auditor?

• A) Consult with the client's legal counsel and with the auditor's legal counsel to determine how the suspected illegal acts will be communicated to the shareholders.
• B) Extend normal auditing procedures to ascertain whether the suspected illegal acts may have a material effect on the financial report.
• C) Inquire of the client's management and consult with the client's legal counsel and/or other specialists, as necessary, to obtain an understanding of the nature of the acts and their possible effects on the financial report.
• D) Notify each member of the audit committee of the board of directors about the nature of the acts and request that they give guidance with respect to the approach to be taken by the auditor.

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Definitions:

Subliminal Perception

The operation of sensory systems in handling information without the individual's conscious recognition.

Just-noticeable Difference

The smallest change in the intensity of a stimulus that can be detected by a sensory system, also known as the difference threshold.

Detection Threshold

The minimum level of stimulus intensity required for a sensory system to detect a stimulus 50% of the time.

Sensory Overload

A condition in which one or more of the body's senses experiences over-stimulation from the environment, leading to feelings of overwhelmedness or inability to focus.