If noncompliance with a law is discovered during the audit of a publicly held company, the auditors should first:
A) Notify the regulatory authorities.
B) Determine who was responsible for the noncompliance.
C) Intensify the examination to identify noncompliance with any laws.
D) Report the act to high level personnel within the client's organization and to the audit committee.

Question

Quizplus · Accepted Answer

The first step should be to report the noncompliance to high level personnel within the client's organization and to the audit committee. This allows the company to take corrective action and address the issue internally. The auditors should also intensify the examination to identify any further noncompliance with laws. It is not the role of the auditors to notify regulatory authorities, but the company may choose to do so after investigating the issue. Determining who was responsible for the noncompliance is important, but it should not be the first step in addressing the issue.

If Noncompliance with a Law Is Discovered During the Audit