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:

Autonomic Nervous System

The part of the nervous system that controls involuntary functions such as heartbeat, digestion, and breathing.

Voluntary Nervous System

Part of the nervous system responsible for the control of voluntary movements and the communication of sensory information to the CNS.

Sympathetic Division

A part of the autonomic nervous system that activates the body's fight or flight response during stressful or emergency situations.

Electrical Activity

The movement of electrical charges or signals through neurons in the brain and throughout the body, foundational for neural communication.