When an External Auditor Suspects That Personnel at an Audit

question 26

Multiple Choice

When an external auditor suspects that personnel at an audit client have committed an illegal act,the auditor has a duty to:

• A) Evaluate whether top management explicitly or implicitly authorized the act
• B) Ignore the act if it concludes that the act has no financial statement effect
• C) Confront the particular person suspected of committing the offending act
• D) Report the act to the SEC of the audit client is a public company

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Definitions:

Repetitive Focus

A manufacturing strategy that emphasizes producing large volumes of the same product or service, aiming for efficiency and consistency in output.

Cross-Over Point

The point at which two different options or systems result in the same level of cost or benefit, making them equally preferable under the conditions given.

Variable Cost

Costs that vary in direct proportion to changes in the level of production or activity, such as materials and labor.

Highly Automated

Systems or processes that operate with minimal human intervention, utilizing advanced technology and machinery for efficiency and precision.