When an auditor becomes aware of a possible illegal act by a client,the auditor should obtain an understanding of the nature of the act in order to ________.
A)evaluate the effect on the financial statements
B)determine the reliability of management's representations
C)consider whether other similar acts may have occurred
D)recommend remedial actions to the audit committee

Question

Quizplus · Accepted Answer

The auditor needs to evaluate the effect of the possible illegal act on the financial statements to determine if it has a material impact and to ensure that the financial statements are not misleading.

When an Auditor Becomes Aware of a Possible Illegal Act