If Material Fraud Perpetrated by Management Is Discovered by the Auditor,the

question 55

Multiple Choice

If material fraud perpetrated by management is discovered by the auditor,the nature of the fraud should always be reported directly to:

• A)the PCAOB
• B)the SEC
• C)the FBI
• D)the audit committee of the company

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Definitions:

Account Balance

The difference between the total debits and total credits in an account, representing the current amount in that account.

Debits

Entries that increase asset or expense accounts, or decrease equity, liability, or revenue accounts, typically noted on the left side of an accounting ledger.

Credits

In accounting, credits refer to an entry on the right side of a double-entry bookkeeping system that increases liabilities, equity, or revenue or decreases an asset or expense account.

Trial Balance

A bookkeeping worksheet in which the balances of all ledgers are compiled into debit and credit columns to ensure a company's bookkeeping system is mathematically correct.