When an Auditor Becomes Aware of Possible Noncompliance by a Client

question 21

Multiple Choice

When an auditor becomes aware of possible noncompliance by a client, the auditor should obtain an understanding of the nature of the act to:

• A)evaluate the effect on the financial statements.
• B)determine the reliability of management's representations.
• C)consider whether other similar acts may have occurred.
• D)recommend remedial actions to the audit committee.

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Definitions:

Kruskal-Wallis Test

A nonparametric statistical test used to compare three or more groups or samples that do not meet the assumption of normality.

Left-tailed Wilcoxon Rank Sum Test

A nonparametric test used to assess whether one of two groups of independent samples tends to have lower values than the other.

Test Statistic

A calculated value from sample data used to test a hypothesis against a null hypothesis.

Independent Samples

Two or more groups of samples that are collected from separate populations and are not related or paired in any way.