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:

Public Order Crime

Refers to behavior that has been labeled criminal because it is contrary to shared norms, social values, and customs.

Prostitution

The act of participating in sexual behaviors for monetary rewards or other types of reimbursement.

Substance Abuse

The harmful or hazardous use of psychoactive substances, including alcohol and illicit drugs, leading to addiction or other detrimental health consequences.

Female Crime

Criminal activities committed by females, which can be influenced by sociological and psychological factors distinct from those affecting male criminals.