The Auditor's First Course of Action When an Illegal Act

question 20

True/False

The auditor's first course of action when an illegal act is uncovered should be to immediately notify the appropriate authorities, including but not limited to the police, and for publicly held companies, the Securities and Exchange Commission.

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Definitions:

ROI

Return on Investment, a measure used to evaluate the efficiency of an investment or to compare the efficiencies of several different investments.

Controllable Margin

The portion of income that can be directly controlled or influenced by management decisions, often excluding fixed costs.

Operating Assets

Assets used in the day-to-day operations of a business, contributing to its ability to generate income.

Contribution Margin

The amount remaining from sales revenue after variable production costs have been deducted, contributing to covering fixed costs.