CPA Aud Quiz
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FORMING CONCLUSIONS AND REPORTING
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A nonissuer construction contractor is audited under AICPA auditing standards and has significant revenue from contracts subject to prevailing wage requirements under the Davis-Bacon Act. The auditor notes repeated underpayments to employees identified by an internal compliance review, but management has not accrued back wages or disclosed the potential liability, stating it will "resolve it later." The auditor believes the matter is likely and reasonably estimable and could be material. Which compliance reporting action should the auditor take?
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