A PA's audit client is a small charity which funds development projects in a small foreign country.Most of its donations come in the form of cash,with tax receipts issued to the donors.Included in the cash receipts are weekly donations by one person,Mr.X,whose last name is easily identifiable as coming from that foreign country.Some of these cash donations exceed $10,000.The PA once asked about Mr.X and accepted as an answer that Mr.X was a wealthy entrepreneur but the PA has done no other work.Which of the following statements is TRUE?

Question

Quizplus · Accepted Answer

The fact that a significant amount of cash donations come from one person, Mr.X, who has a easily identifiable foreign last name, raises concerns about the possibility of money laundering or other illegal activities. The PA's failure to perform any additional work or investigation regarding Mr. X's donations represents an inadequate audit effort and may be considered willful blindness or complicit in an illegal act. Therefore, the PA cannot issue a clean opinion without further investigating this matter.

A PA's Audit Client Is a Small Charity Which Funds