Final answer:
It is true that when an auditor suspects an illegal act, their first step should be to gather additional evidence to ascertain the extent of the suspected illegality.
Step-by-step explanation:
When an auditor believes that an illegal act may have occurred, the statement that 'the first step he or she should take is to gather additional evidence to determine the extent of the illegality' is True. The auditor must maintain professional skepticism and gather adequate evidence to support the findings before reaching a conclusion about the illegality.
The gathering of evidence is crucial for auditors to make an informed judgment on whether to report the act to the appropriate authorities or take further action. According to professional standards, an auditor should not ignore signs of illegality and must always ensure the integrity of their work by not falsifying data or selectively reporting information.