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

question 28

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 the audit committee 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:

Pasture Lands

Areas of land covered with grass or other vegetation suitable for grazing by livestock.

Letter of Requisition

A formal written request, often used in official or professional settings, to demand the provision of goods, services, or information.

Formal Demand

A formal request, usually in writing, requiring a person or entity to fulfill a legal obligation or payment.

Payment

The act of transferring money or its equivalent in exchange for goods or services.