A Staff Auditor, Nearly Finished with an Audit Engagement, Discovers

Multiple Choice

A staff auditor, nearly finished with an audit engagement, discovers that the director of marketing has a gambling habit. The gambling issue is not directly related to the existing engagement, and there is pressure to complete the current engagement. The auditor notes the problem and forwards the information to the chief audit executive, but performs no further follow-up. Which of the following statements is true about the auditor's actions?

A) They are in violation of the IIA Code of Ethics because the auditor withheld meaningful information.
B) They are in violation of the Standards because the auditor did not properly follow up on a red flag that might indicate the existence of fraud.
C) They are in violation of neither the IIA Code of Ethics nor the Standards.
D) They are not in violation of the Standards but are in violation of the IIA Code of Ethics.