Final answer:
In auditing standards, illegal acts refer to any violations of laws or government regulations other than errors and fraud, impacting financial statements and requiring auditor consideration.
Step-by-step explanation:
Illegal acts in auditing standards are primarily defined as violations of laws or government regulations other than errors and fraud. Auditing standards recognize that not all violations of laws and regulations are the same. While errors may occur unintentionally in the financial statements, fraud involves intentional misstatements or omissions.
However, 'illegal acts' imply a broader category that encompasses any action that breaks laws or regulations, outside the categories of fraud and errors, which can impact the financial statements and, consequently, the audit. In the context of auditing, it is the responsibility of the auditors to consider how these acts might affect the accuracy and reliability of the financial statements.
For example, criminal law establishes what is considered a crime, actions that could harm or endanger others, and imposes punishment. This encompasses a wide range of offenses from money laundering to embezzlement, which can be detected during an audit when accounting discrepancies are identified.
Businesses often face scrutiny based on their adherence to a code of ethics, laws, and regulations, which also includes how they respond to illegal acts committed within or against the organization.
Therefore, the correct answar is A) violations of laws or government regulations.