Question

When the auditors discover that an audit client has committed an illegal act they will ordinarily report it to the:

a.Audit committee of the company being audited.
b.Securities and Exchange Commission on Form 8-M.
c.Justice Department of the U.S. government.
d.American Institute of Certified Public Accountants Division of Professional Ethics.

Answer 1

Auditors report illegal acts discovered during an audit to the company's audit committee, which is fundamental to corporate governance and in line with the Sarbanes-Oxley Act.

Step-by-step explanation:

When auditors discover that an audit client has committed an illegal act, they ordinarily report it to the audit committee of the company being audited. The audit committee is a key component in corporate governance and is responsible for overseeing the financial reporting and disclosure process.

Reporting to the audit committee is consistent with the principles of Sarbanes-Oxley Act of 2002, designed to protect investors by improving the accuracy and reliability of corporate disclosures made pursuant to the securities laws, and for other purposes.