The audit client's board of directors and audit committee refused to take any action with respect to an immaterial illegal act which was brought to their attention by the auditor. Because of their failure to act, the auditor withdrew from the engagement. The auditor's decision to withdraw was primarily due to doubts concerning:
A)adequate financial statement disclosures.
B)compliance with the statutory laws and regulations.
C)scope limitations resulting from their inaction.
D)the integrity of management.

Question

Quizplus · Accepted Answer

The auditor's decision to withdraw was due to doubts concerning the integrity of management because the board of directors and audit committee refused to take any action with respect to an illegal act, even though it was considered immaterial. This suggests a lack of commitment to ethical behavior, which raises concerns about the overall integrity of management.

The Audit Client's Board of Directors and Audit Committee Refused