An auditor who discovers that client employees have committed an illegal act with material consequences on the financial statements is most likely to seek legal advice and consider withdrawing from the engagement if ________.
A)the illegal act is a violation of generally accepted accounting principles
B)the client does not take appropriate action after being informed about the illegal act
C)the illegal act was committed during a prior year that was not audited
D)the auditor has already assessed control risk at the maximum level

Question

Quizplus · Accepted Answer

If the auditor discovers an illegal act with material consequences on the financial statements, they are required to inform the client and seek appropriate action. If the client does not take appropriate action, the auditor has a responsibility to consider withdrawing from the engagement. The fact that the illegal act is a violation of generally accepted accounting principles, occurred in a prior year, or has already been assessed at the maximum level of control risk does not change the auditor's responsibility to take appropriate action and seek legal advice.

An Auditor Who Discovers That Client Employees Have Committed an Illegal