An auditor has withdrawn from an audit engagement of a publicly held company after finding fraud that may materially affect the financial statements.The auditor should set forth the reasons and findings in correspondence with the
A) Securities and Exchange Commission.
B) Client's legal counsel.
C) Stock exchanges where the company's stock is traded.
D) Audit committee of the board of directors.

Question

Quizplus · Accepted Answer

The auditor should report their findings to the client's audit committee of the board of directors. This is the most appropriate course of action as it allows for the client to take the necessary steps to address the fraud and potentially avoid future issues. Reporting to the SEC or stock exchanges may also be necessary, but it should be done after notifying the audit committee. The auditor should also consider informing the client's legal counsel, but this should not be the first step taken.

An Auditor Has Withdrawn from an Audit Engagement of a Publicly