When an auditor becomes aware of a possible illegal act by a client, the auditor should obtain an understanding of the nature of the act to:

Question

Quizplus · Accepted Answer

Choice "A" is correct. When an auditor becomes aware of a possible client illegal act, the auditor should next obtain an understanding of the nature of the act in order to evaluate the effect on the financial statements. Choices "B", "C", and "D" are incorrect. After evaluating the effect of the illegal act on the financial statements, the auditor may also determine the reliability of management's representations, consider whether other similar acts may have occurred, or recommend remedial actions to those charged with governance.

When an Auditor Becomes Aware of a Possible Illegal Act