Why should the auditor consult with entity’s legal counsel?
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When an auditor becomes aware of information concerning a possible illegal act, he or she should obtain an understanding of the circumstances of the act by making inquires of management above those involved. Also, the auditor should obtain enough evidence to judge the effect of the act on the financial statements.
If evidence provided by management doesn’t convince the auditor that an illegal act has not occurred, why should the auditor consult with the entity’s legal counsel?
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