When the Auditors Become Aware of Noncompliance with a Law

question 109

Multiple Choice

When the auditors become aware of noncompliance with a law or regulation committed by client personnel,the primary reason that the auditors should obtain a better understanding of the nature of the act is to

• A) Recommend remedial actions to the audit committee.
• B) Evaluate the effect of the noncompliance on the financial statements.
• C) Determine whether to contact law enforcement officials.
• D) Determine whether other similar acts could have occurred.

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Definitions:

Moral Development

The process by which individuals learn to differentiate right from wrong and develop principles of ethical behavior over time.

Moral Standards

Guidelines defining what is morally right or wrong and what constitutes good or bad conduct.

Obedience

The act of following directions or commands from authority figures, often seen as a form of social influence.

Intelligence Quotient

A measure of a person's intelligence as indicated by an intelligence test, relative to the age of the individual.