An Auditor Has Uncovered Suspicious Expense Reimbursements Paid to the Chief

question 28

Multiple Choice

An auditor has uncovered suspicious expense reimbursements paid to the chief executive officer of its audit client.What should the auditor do?

• A)Discuss the matter with the chief executive officer.
• B)Report the matter in writing to the chief financial officer.
• C)Report the matter in writing to the audit committee.
• D)Report the matter in writing to the federal government.

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Definitions:

Wholly Owned Subsidiary

A company whose entire stock is held by another company, making it fully controlled by the parent company.

Share Repurchase

A program by which a company buys back its own shares from the marketplace, reducing the amount of outstanding stock while potentially increasing the value of remaining shares.

Purchase Accounting Method

An accounting method used in mergers and acquisitions where the acquiring company revalues the assets and liabilities of the acquired company.

Fair Market Value

The price at which an asset would trade in a competitive auction setting.