The auditor's duty to inform management extends to nonmaterial irregularities.

Question

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The auditor's duty to inform management extends to both material and nonmaterial irregularities. This duty arises from the responsibility to report any potential fraud, noncompliance, or other irregularities that may be indicative of a breakdown in internal controls or a lack of integrity on the part of management. Even nonmaterial irregularities can be an indication of a larger underlying problem that management needs to address. Therefore, the auditor must communicate such irregularities to management in accordance with professional standards.

The Auditor's Duty to Inform Management Extends to Nonmaterial Irregularities