Question

The auditor's first course of action when an illegal act is uncovered should be to immediately notify

the appropriate authorities, including but not limited to the police, and for publicly held companies, the
Securities and Exchange Commission.
A) True
B) False

Answer 1

The auditor's first course of action when an illegal act is uncovered is NOT to immediately notify the appropriate authorities. Option b.

Step-by-step explanation:

False(b). The auditor's first course of action when an illegal act is uncovered is not to immediately notify the appropriate authorities, including but not limited to the police and, for publicly held companies, the Securities and Exchange Commission (SEC).

The auditor's duty is to report any illegal acts to the management of the company being audited. If the management doesn't address or appropriately respond to the illegal act, then the auditor may have an obligation to report it to the appropriate external authorities. The auditor must maintain confidentiality unless required by law or professional standards to disclose the illegal act.