Question

What should an auditor do when becoming aware of violations of the FCPA?

a. Contact foreign officials in the country where the client has business operations.

b. Notify the audit committee about the violations, their circumstance, and the effect on the financial statements.

c. Contact the U.S. marshals.

d. Design internal controls to deter improper payments.

Answer 1

An auditor should notify the company's audit committee about FCPA violations, the circumstances, and the potential impact on financial statements. Contacting foreign officials, U.S. marshals, or designing internal controls are not the auditor's responsibilities.

Step-by-step explanation:

When an auditor becomes aware of potential violations of the Foreign Corrupt Practices Act (FCPA), it is crucial that they take the appropriate steps in accordance with professional and legal standards. The best course of action is to notify the audit committee of the company about the violations, detail the particular circumstances, and discuss the potential effects on the company's financial statements. This helps ensure that the company's governing body is aware of the legal issues and can take the necessary steps to address them, which may include conducting an internal investigation, reporting to the proper authorities, or taking corrective action regarding internal controls. Contacting foreign officials or U.S. marshals is not an auditor's responsibility and designing internal controls is a management function, not the auditor's primary role.