Certified Government Auditing Professional (CGAP) Practice Exam 2026 – The All-in-One Guide to Exam Success

The reason the choice related to a violation of the Code of Ethics is correct lies in the fundamental principles governing the professional conduct of auditors. Auditors have an ethical obligation to act with integrity and objectivity, which includes the responsibility to report unlawful activities when they become aware of them. Failure to report such activities, even in the absence of conclusive evidence, could facilitate ongoing unlawful behavior and hence could be construed as aiding and abetting those activities.

Moreover, professional standards and codes of ethics in the auditing field emphasize the importance of transparency in governance and accountability. The responsibility to report extends beyond mere compliance with statutory obligations; it aligns with the ethical duty to uphold the integrity of the institution and protect the public interest. Considering this, the choice that indicates a violation of the Code of Ethics accurately reflects the gravity of the auditor's responsibility in handling knowledge of unlawful acts.

The other answers do not encompass the key ethical obligations that auditors face regarding unlawful activities, primarily because they downplay the seriousness of reporting unlawful activity or misinterpret the auditor's duty to maintain confidentiality over obligations to report ethically questionable actions. Thus, the correct understanding of the auditor's role is crucial for maintaining the integrity of the profession and ensuring compliance with both ethical standards and legal requirements.