Other than inquiring of management about policies they have established to prevent illegal acts and whether management knows of any laws or regulations that the company has violated, the auditor should not search for indirect-effect illegal acts unless there is reason to believe they may exist.

Question

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Auditors should not proactively search for indirect-effect illegal acts unless there is reason to suspect their existence. Their primary responsibility is to obtain sufficient evidence to support an opinion on the financial statements and to report any material misstatements or fraud that they discover.

Other Than Inquiring of Management About Policies They Have Established