An auditor concludes that a client has committed an illegal act that has not been properly accounted for or disclosed. The auditor is most likely to withdraw from the engagement when the

Question 19Answer

a. illegal act has an effect on the financial statements that is both material and direct.

b. auditor is precluded from obtaining sufficient competent evidence about the illegal act.

c. client refuses to take the remedial steps deemed necessary by the auditors.

d. auditor cannot reasonably estimate the effect of the illegal act on the financial statements.