When might an auditor report a potential illegal act to somebody other than the board of directors?

An auditor may report a potential illegal act to parties other than the board of directors particularly when the act involves a board member. This scenario presents a significant conflict of interest and jeopardizes the objectivity required in the audit process. If a board member is implicated in illegal activity, reporting the matter to the board could compromise the investigation or allow for potential cover-up efforts. As a result, it is generally considered more appropriate for the auditor to escalate the matter to an external authority or higher management level that is independent of the board, ensuring that there is integrity in handling the situation.

While there are other circumstances where reporting to different parties might seem plausible, those specifics do not align with the necessary ethical and procedural safeguards that auditors must adhere to when dealing with illegal conduct involving board members. This reinforces the auditor's duty to maintain independence and uphold the integrity of their findings.