Protection Transparency,Inc.is being audited by Messer and Bromely,LLP.During the assessment of fraud,Messer and Bromely discover that the controller has been creating fictional sales and posting them to the general ledger.Who should the auditors make aware of this issue?
A)Protection Transparency's legal counsel.
B)The federal law enforcement agency.
C)The chairman of Protection Transparency's audit committee.
D)The predecessor auditor of Protection Transparency.

Question

Quizplus · Accepted Answer

The auditors should make the chairman of Protection Transparency's audit committee aware of the issue as they are the ones responsible for overseeing the financial reporting process and ensuring the accuracy of financial statements. They can take immediate action to investigate the matter and take necessary steps to prevent any future fraud. Legal counsel may also be informed, but it is not their primary responsibility to address such issues. The federal law enforcement agency may come into the picture if criminal charges are filed, but that is not the first step in addressing the issue. The predecessor auditor may also need to be informed, but informing the audit committee is the first priority.