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[The following paragraph was effective for interim periods within fiscal years beginning after December 15, 2002. It was amended as a result of the adoption of Auditing Standard No. 5, effective for reviews of interim periods ending on or after November 15, 2007. See PCAOB Release 2007-005A.

Return to the current version.]

AU 722.32

When conducting a review of interim financial information, the accountant may become aware of fraud or possible illegal acts. If the matter involves fraud, it should be brought to the attention of the appropriate level of management. If the fraud involves senior management or results in a material misstatement of the financial statements, the accountant should communicate the matter directly to the audit committee as described in section 316, Consideration of Fraud in a Financial Statement Audit, paragraphs .79 through .82. If the matter involves possible illegal acts, the accountant should assure himself or herself that the audit committee is adequately informed, unless the matter is clearly inconsequential. fn 21 (See section 317, Illegal Acts by Clients, paragraph .17.)

Footnotes (AU Section 722 — Interim Financial Information):

fn 21 The accountant may have additional communication responsibilities pursuant to section 317, Illegal Acts by Clients; Section 10A of the Securities Exchange Act of 1934; and section 316, Consideration of Fraud in a Financial Statement Audit.

Copyright © 2002, American Institute of Certified Public Accountants, Inc.