Question

Under what circumstances might an audit team have a duty to disclose management’s frauds to parties...

Under what circumstances might an audit team have a duty to disclose management’s frauds to parties other than the company’s management and its board of directors?

Homework Answers

Answer #1

When a fraud has a material impact on a financial statement or it involves senior management, then it should be directly reported to auditors committee. However immaterial fraud should be reported to the management and auditor committee.

Under some circumstances, the auditors have a responsibility to communicate the fraud outside the entity. For example, when audits of SEC registrants is done, the SEC required auditors to report certain illegal acts related to the Private Securities Litigation Reform Act of 1995.

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
IRR and NPV conflict Under what circumstances might the IRR and NPV approaches have conflicting results?
IRR and NPV conflict Under what circumstances might the IRR and NPV approaches have conflicting results?
You have recently joined the international audit team at a large company responsible for janitorial work...
You have recently joined the international audit team at a large company responsible for janitorial work at many different local businesses. Because of the significant number of consumables used in janitorial work, your company has a large purchasing department. You have been asked to analyze the purchases data set for potential frauds. Steps/Questions 2. Find any vendors who are charging too much for their product compared with other vendors. In addition to average prices for each product and vendor, do...
Under what circumstances might it be more effective for people experiencing a negative externality to file...
Under what circumstances might it be more effective for people experiencing a negative externality to file a class-action lawsuit than attempt to resolve the problem through bargaining?
1. Under what general circumstances should an audit firm choose not to accept a high-risk engagement?...
1. Under what general circumstances should an audit firm choose not to accept a high-risk engagement? 2. Do you believe auditors should have used confirmations in auditing accounts payable? Defend your answer. Briefly explain the differing audit objectives related to accounts receivable and accounts payable confirmation procedures and the key differences in how these procedures are applied.
Under what circumstances might you be willing to pay more than $1,000 for a coupon bond...
Under what circumstances might you be willing to pay more than $1,000 for a coupon bond that matures in three years, has a coupon rate of 10 percent, and a face value of $1,000? If the interest rate in the market were  (1)  than 10 percent, the present value of the payment flows associated with the bond would be  (2)  than $1,000 1) a) Less b) More 2) a) Lower b) Higher I don't need the answer to the first question. I just need...
You have been assigned as the audit team leader of Bank Salalah, a medium-sized bank, for...
You have been assigned as the audit team leader of Bank Salalah, a medium-sized bank, for the end of year audit. Your firm is a newly appointed audit firm of the bank. The bank has been operating in the last three years and has a plan of establishing its second branch to be located also in Salalah. Informal discussions with some employees disclose that employees are happy with the bank because “there are just few rules to follow”. However, your...
19.   Under to PSA 260, those matters that arise from the audit of financial statements and...
19.   Under to PSA 260, those matters that arise from the audit of financial statements and in the opinion of the auditor, are both important and relevant to those charged with governance in overseeing the financial reporting and disclosure process are called a.   Audit matters of governance interest b.   Significant audit matters c.   Auditor findings d.   Material misstatement in the financial statements 20.   Audit matters of governance interest to be communicated to those charged with governance ordinarily include a.   Audit...
For each of the following situations, indicate the type of financial statement audit report that you...
For each of the following situations, indicate the type of financial statement audit report that you would issue and briefly explain your reasoning. Assume that all companies mentioned are public companies. 1. In prior years, Daffy Co. used first-in-first-out (FIFO) to value its inventory. During the current year, Daffy Co. changed to last-in-first-out (LIFO) to value its inventory. The changed produced a material effect on net income for the current year. The change was adequately disclosed in the notes to...
The following audit report was drafted by a trainee on the audit of Golf (Pty) Ltd...
The following audit report was drafted by a trainee on the audit of Golf (Pty) Ltd (“Golf”), a company which manufactures golf clubs. The trainee was asked to draft the report at the conclusion of the audit for the financial year end 31 March 2017 as part of on-the-job training and you have to evaluate his report. The shareholders of Golf included a clause in the company’s Memorandum of Incorporation which requires that the company’s annual financial statements are extremely...
Stock repurchases There are a number of reasons why a firm might want to repurchase its...
Stock repurchases There are a number of reasons why a firm might want to repurchase its own stock. Read the statement and then answer the corresponding question about the company’s motivation for the stock repurchase: Happy Orange Storage Company’s board of directors has decided to repurchase some of its stock on the open market because it wants to increase the company’s debt-to-equity ratio. What is the company’s motivation for the stock repurchase? To adjust the firm’s capital structure To acquire...