An auditor discovers a material misappropriation of assets involving the theft of $500,000 of inventory. Restitution will not be made. Which of the following statements is not correct regarding the auditor's responsibility for reporting the misappropriation of assets?

A. Because theft wasinvolved, the auditor must report it to the client's lawyer with a follow-up tosee that it had been reported to the proper legal enforcement group.

B. The theft, becauseit is material, should be separately reported as a line item in the financialstatements because it is unusual and non-recurring and there will be norestitution.

C. The theft must bereported to the audit committee.

D. The theft must bereported to top management