An Auditor Who Discovers That Client Employees Have Committed an Illegal

question 14

Multiple Choice

An auditor who discovers that client employees have committed an illegal act that has a material effect on the client's financial statements most likely would withdraw from the engagement if

• A) The noncompliance is a violation of generally accepted accounting principles.
• B) The client does not take the remedial action that the auditor considers necessary.
• C) The illegal act was committed during a prior year that was not audited.
• D) The auditor has already assessed control risk at the maximum level.

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Definitions:

Nicotine

A stimulant and addictive substance found in tobacco products that acts on the nervous system.

Sympathetic Responses

Physiological reactions initiated by the sympathetic nervous system that prepare the body for 'fight or flight' situations, such as increased heart rate and blood flow.

Parasympathetic Responses

Parasympathetic responses are reactions mediated by the parasympathetic nervous system, involved in rest, digestion, and energy conservation activities in the body.

Autonomic Reflexes

Involuntary bodily functions mediated by the autonomic nervous system, such as heart rate, digestion, and respiratory rate.