Which of the Following Is the Auditor Least Likely to Do

question 46

Multiple Choice

Which of the following is the auditor least likely to do when aware of an illegal act?

• A)Discuss the matter with the client's legal counsel.
• B)Obtain evidence about the potential effect of the illegal act on the financial statements.
• C)Contact the local law enforcement officials regarding potential criminal wrongdoing.
• D)Consider the impact of the illegal act on the relationship with the company's management.

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Definitions:

Outstanding Stock

The number of shares of a corporation that have been issued and are currently owned by shareholders.

Net Income

The amount of profit remaining after all expenses, including taxes and interest, have been deducted from total revenues.

Valuation Allowance

An accounting technique used to offset or reduce the carrying value of certain tax assets if it's more likely than not that they will not be realized.

Unrealized Gain

The increase in value of an asset or investment that has not been sold or exchanged, thus not yet generating cash.