An Auditor Discovers a Likely Fraud During an Audit, but Concludes

question 20

Multiple Choice

An auditor discovers a likely fraud during an audit, but concludes that the effect of the fraud is not sufficiently material to affect the auditor's opinion.The auditor should:

• A)disclose the fraud to the appropriate level of the client's management.
• B)disclose the fraud to appropriate authorities external to the client.
• C)discuss with the client the additional audit procedures that will be needed to identify the exact amount of the fraud.
• D)modify the audit program to include tests specifically designed to identify the fraud and its impact on the financial report.

---

Definitions:

Secondary Boycott

An illegal labor action in which unionized employees who have a labor dispute with their employer boycott another company to force it to cease doing business with their employer.

Labor Dispute

A disagreement between employers and employees regarding employment conditions, such as wages, working hours, or workplace policies.

National Labor Relations Board

An independent federal agency in the United States tasked with enforcing US labor law in relation to collective bargaining and unfair labor practices.

Union Avoidance

Strategies and practices employed by companies to prevent employees from joining or forming labor unions.