Final answer:
Auditors should inform the relevant stakeholders when they become aware of significant illegal acts, ensuring prompt action and accountability.
Step-by-step explanation:
An auditor should ensure that appropriate stakeholders are adequately informed when they become aware of significant illegal acts. This is necessary to address the illegal acts effectively and minimize any potential harm to the stakeholders involved. By notifying the relevant parties, such as management, board of directors, regulatory agencies, and law enforcement authorities, the auditor can play a vital role in facilitating timely action and ensuring accountability.
For example, if an auditor discovers fraudulent financial reporting by a company, they should promptly inform the company's management and board of directors. This allows the responsible parties to take corrective measures, such as launching an internal investigation or reporting the fraud to law enforcement agencies.
Furthermore, the auditor should consider their professional obligations and ethical responsibilities, which may include reporting illegal acts to the appropriate regulatory bodies or authorities. This helps ensure that necessary disciplinary and legal actions are taken against individuals or organizations involved in the illegal acts.