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Auditing and Attestation 17-20

Terms in this set (333)

Communicated by the auditor to the auditee and the auditee fails to make a required report of the matter. Under Government Auditing Standards, auditors should report fraud, noncompliance, and abuse directly to parties outside the auditee (for example, to a federal inspector general or a state attorney general) in two circumstances. These requirements are in addition to any legal requirements for direct reporting. First, if auditors have communicated such fraud, noncompliance, or abuse to the auditee and (s)he fails to report them, the auditors should communicate their awareness of that failure to the auditee's governing body. If the auditee does not make the required report as soon as practicable after the auditor's communication with its governing body, the auditors should report the fraud, noncompliance, or abuse directly to the external party specified in the law or regulation. Second, management is responsible for taking timely and appropriate steps to remedy fraud, noncompliance, or abuse that auditors report to it. When fraud, noncompliance, or abuse involves assistance received directly or indirectly from a government agency, auditors may have a duty to report it directly if management fails to take remedial steps. If auditors conclude that such failure is likely to cause them to depart from the standard report or resign from the audit, they should communicate that conclusion to the auditee's governing body. Then, if the auditee does not report the fraud, noncompliance, or abuse as soon as practicable to the entity that provided the government assistance, the auditors should report directly to that entity.