An Auditor Who Discovers That a Client's Employees Paid Small

question 11

Multiple Choice

An auditor who discovers that a client's employees paid small bribes to municipal officials most likely would withdraw from the engagement if

• A) The payments violated the client's policies regarding the prevention of illegal acts.
• B) The client receives financial assistance from a federal government agency.
• C) Documentation that is necessary to prove that the bribes were paid does not exist.
• D) Management fails to take the appropriate remedial action.

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Definitions:

Liability

A financial obligation or responsibility that an individual or entity owes to another.

Premiums

The amounts paid for insurance coverage by the insured to the insurance company.

Insurable Interest

A basic requirement for the issuance of an insurance policy, indicating that the person purchasing the policy has a stake in the safety or preservation of the insured item or person.

Equipment

Tangible assets used in the operation or activities of a business or entity, ranging from office supplies to machinery.