Who should the auditors first notify if they discover a material fraud?

Question

Quizplus · Accepted Answer

The auditors should first notify the audit committee of the company if they discover a material fraud, as the audit committee is responsible for oversight of the company's financial reporting and the work of the auditors. The audit committee can then work with management, the SEC, and other relevant parties as necessary to address the situation. While the PCAOB is a regulatory body that oversees audit firms, it is not the appropriate first point of contact for reporting a material fraud.

Who Should the Auditors First Notify If They Discover a Material