Detecting Illegal Acts

Question 1

What is the Legal and Regularity Framework?

Answer 1

Those laws and regulations to which an entity is subject; noncompliance may result in fines, litigation, or other consequences that may have a material effect on the financial statements

Question 2

What should the auditor do when Laws and regulations have a direct effect on the amounts and/or disclosures in the financial statements?

Answer 2

The auditor should OBTAIN sufficient appropriate audit evidence regarding material amounts and disclosures

Question 3

What should the auditor do when Other laws and regulations do not have a direct effect on the financial statements?

Answer 3

The auditor should PERFORM specified audit procedures that may identify noncompliance that may have a material effect on the financial statements