If, as a result of auditing procedures, an auditor believes that a client may have committed illegal acts, which of the following actions should be taken immediately by the auditor?
A)Consult with the client's legal counsel and with the auditor's legal counsel to determine how the suspected illegal acts will be communicated to the shareholders.
B)Extend normal auditing procedures to ascertain whether the suspected illegal acts may have a material effect on the financial report.
C)Inquire of the client's management and consult with the client's legal counsel and/or other specialists, as necessary, to obtain an understanding of the nature of the acts and their possible effects on the financial report.
D)Notify the audit committee about the nature of the acts and request that they give guidance with respect to the approach to be taken by the auditor.

Question

Quizplus · Accepted Answer

When an auditor suspects illegal acts, the immediate step is to inquire of the client's management and consult with legal counsel or other specialists to understand the nature of the acts and their potential impact on the financial statements. This helps in assessing the situation accurately before taking further steps.

If, as a Result of Auditing Procedures, an Auditor Believes