Auditors have a higher degree of responsibility for detecting direct-effect illegal acts than indirect-effect illegal acts.

Question

Quizplus · Accepted Answer

Auditors have a higher degree of responsibility for detecting direct-effect illegal acts because these acts have a direct impact on the financial statements and may result in material misstatements. On the other hand, indirect-effect illegal acts may not have a direct impact on the financial statements and may be more difficult to detect. However, auditors still have a duty to report both direct and indirect illegal acts if they become aware of them during the course of an audit.

Auditors Have a Higher Degree of Responsibility for Detecting Direct-Effect