Several Months After an Unqualified Audit Report Was Issued, the Auditor

Several months after an unqualified audit report was issued, the auditor discovers the financial statements were materially misstated. The client's CEO agrees that there are misstatements, but refuses to correct them. She claims that "confidentiality" prevents the CPA from informing anyone.

A) The CEO is correct and the auditor must maintain confidentiality.
B) The CEO is incorrect, but because the audit report has been issued it is too late.
C) The CEO is correct, but to be ethically correct the auditor should violate the confidentiality rule and disclose the error.
D) The CEO is incorrect, and the auditor has an obligation to issue a revised audit report, even if the CEO will not correct the financial statements.

Correct Answer:

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