Choice "A" is correct. The auditor may conclude that withdrawal is necessary if the client does not take the remedial action that the auditor considers necessary in the circumstances, even when the act of noncompliance is not material to the financial statements.
Choice "b" is incorrect. Whether or not the instance of noncompliance with laws and regulations is a violation of GAAP does not determine the need to withdraw from the engagement.
Choice "d" is incorrect. An act of noncompliance committed in the prior year would not necessarily cause an auditor to withdraw from a current engagement.
Choice "c" is incorrect. Assessment of control risk at a high level would cause an auditor to modify the nature, timing, or extent of audit procedures, but would not cause withdrawal from an engagement.