An Auditor Who Discovers That Client Employees Have Committed an Illegal

Multiple Choice

An auditor who discovers that client employees have committed an illegal act with material consequences on the financial statements is most likely to seek legal advice and consider withdrawing from the engagement if ________.

A) the illegal act is a violation of generally accepted accounting principles
B) the client does not take appropriate action after being informed about the illegal act
C) the illegal act was committed during a prior year that was not audited
D) the auditor has already assessed control risk at the maximum level