An auditor who discovers that client employees have committed an illegal act that has a material effect on the client's financial statements most likely would withdraw from the engagement if:
A)the noncompliance is a violation of generally accepted accounting principles.
B)the client does not take the remedial action that the auditor considers necessary.
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 client does not take the remedial action that the auditor considers necessary, it may indicate a lack of cooperation or an unwillingness to correct the illegal act, and could lead to a loss of independence or an inability to rely on management representations. This could result in the auditor withdrawing from the engagement to avoid association with the illegal act.

An Auditor Who Discovers That Client Employees Have Committed an Illegal