If Noncompliance with a Law Is Discovered During the Audit

question 10

Multiple Choice

If noncompliance with a law is discovered during the audit of a publicly held company, the auditors should first:

• A) Notify the regulatory authorities.
• B) Determine who was responsible for the noncompliance.
• C) Intensify the examination to identify noncompliance with any laws.
• D) Report the act to high level personnel within the client's organization and to the audit committee.

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Definitions:

Cost Centers

Departments or units within an organization that incur costs but do not directly generate revenues, often evaluated for efficiency and cost management.

Manufacturing Plants

Facilities where raw materials are transformed into finished goods through various processes and machinery in the course of production.

Responsibility Accounting

A system of accounting that segments financial information by areas of responsibility, allowing managers to be accountable for those items under their control.

Management Levels

The different tiers of management within an organization, typically including top-level, middle-level, and lower-level management, each with specific responsibilities.