Audit standards distinguish auditors' responsibility for planning procedures for detecting noncompliance with laws and regulations having a direct effect on financial statements versus planning procedures for detecting noncompliance with laws and regulations that do not have a direct effect on financial statements. Required: b. Indicate whether each of the following instances of noncompliance, are direct-effect (D) or indirect-effect (I) noncompliance: A manufacturer inflates expenses on its corporate tax return