Under the Private Securities Litigation Reform Act of 1995, Baker, CPA, reported certain uncorrected illegal acts to Supermart’s board of directors. Baker believed that failure to take remedial action would warrant a qualified audit opinion because the illegal acts had a material effect on Supermart’s financial statements. Supermart failed to take appropriate remedial action and the board of directors refused to inform the SEC that it had received such notification from Baker. Under these circumstances, Baker is required to
a. Resign from the audit engagement within ten business days.
b. Deliver a report concerning the illegal acts to the SEC within one business day.
c. Notify the stockholders that the financial statements are materially misstated.
d. Withhold an audit opinion until Supermart takes appropriate remedial action.
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