If a client has violated federal tax laws,
A) the auditor must notify the IRS.
B) and the amount is significant, the auditor should communicate with those charged with governance.
C) the noncompliance generally will not impact the financial statements.
D) the auditor does not need to evaluate the effects of the noncompliance on other aspects of the audit.

Question

Quizplus · Accepted Answer

If a client has violated federal tax laws and the amount is significant, the auditor should communicate with those charged with governance as it could have a material effect on the financial statements. The auditor may also need to evaluate the effects of the noncompliance on other aspects of the audit. While the auditor is not required to notify the IRS, in some cases, the auditor may decide to notify the IRS if it is required by law or if it is necessary to fulfill their ethical responsibilities. Noncompliance could impact the financial statements if it results in penalties, fines, or additional taxes owed.

If a Client Has Violated Federal Tax Laws