Protection Transparency, Inc. is being audited by Messer and Bromely, LLP. During the assessment of fraud, Messer and Bromely discover that the controller has been creating fictional sales and posting them to the general ledger. Who should the auditors make aware of this issue?
A) Protection Transparency's legal counsel.
B) The police.
C) The chairman of Protection Transparency's audit committee.
D) The predecessor auditor of Protection Transparency.

Question

Quizplus · Accepted Answer

The auditors should make the chairman of Protection Transparency's audit committee aware of this issue as they are responsible for overseeing financial reporting and disclosure. This would ensure appropriate action is taken to address the fraud and prevent it from continuing. Legal counsel or the police may be involved later, but informing the audit committee should be the first step. The predecessor auditor may also be informed, but this is not the best choice in this situation.