What is the auditor's responsibility with regard to illegal acts?
A)To detect and report illegal acts that have an indirect and material effect on financial statement amounts.
B)To detect and report illegal acts that have a direct and material effect on financial statement amounts.
C)To detect and report illegal acts that have a direct and immaterial effect on financial statement amounts.
D)To detect and report illegal acts that have an indirect and immaterial effect on financial statement amounts.

Question

Quizplus · Accepted Answer

The auditor's responsibility with regard to illegal acts is to detect and report illegal acts that have a direct and material effect on financial statement amounts. This includes fraudulent financial reporting and misappropriation of assets. The auditor should report these findings to the appropriate level of management and, if necessary, to those charged with governance or to regulatory agencies. The auditor's responsibility does not extend to detecting or investigating all illegal acts, but only those that have a material effect on the financial statements.

What Is the Auditor's Responsibility with Regard to Illegal Acts