When an Auditor Becomes Aware of a Possible Illegal Act

question 30

Multiple Choice

When an auditor becomes aware of a possible illegal act by a client,the auditor should obtain an understanding of the nature of the act in order to ________.

• A)evaluate the effect on the financial statements
• B)determine the reliability of management's representations
• C)consider whether other similar acts may have occurred
• D)recommend remedial actions to the audit committee

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Definitions:

Units of Product

Specific quantities of a product produced, identified for purposes of measurement, sale, or analysis.

MU/P

The marginal utility per unit of price, which helps to calculate how much satisfaction consumers derive from purchasing additional units of a product relative to its cost.

Newly Introduced Product

A product that has recently been launched into the market, often featuring new or innovative characteristics.

Existing Product

A product that has already been developed and is available in the market for consumers.