[startupcfo]

I’m getting confused over an auditor’s obligations/rights when it comes to reporting a client’s fraudulent acts, or non-compliance. If an auditor thinks the client is breaking the law, what is their obligation?

A) Report to the government (SEC possibly)
B) Keep quiet to protect client confidentiality
C) Answer depends on whether client is receiving government funding
D) something else

BEC - 87 | 02/28
REG - 70 | 06/10, REMATCH | 08/30
AUD - XX | 09/10
FAR - XX | 12/10

[jgr1982]

I think the only obligation would be to report to the Board. I don't think you are required to report to any kind of law enforcement agency.

[Sticky Nicky]

some gov't compliance audits u have to report it to the agency that hired you,,,otherwise for fraud its to those charged with governance,,,if their an issuer and they fail to take remediate action within a day you report it to the SEC

[startupcfo]

In a similar issue, check out MCQ #751

An auditor most likely would be responsible for assuring that management communicates significant deficiencies in the design of the internal control:

D. to specific legislative and regulatory bodies when reporting under government auditing standards.

When reporting under Government Auditing Standards, the auditor is required to provide in all audits a written report on internal control for distribution to specific legislative and regulatory bodies, as well as management and the audit committee. This report should include a description of significant deficiencies in the design of the internal control.

So clarify – does that mean that the auditor puts in a report for management and says “you need to tell the government yourself”, or does it mean the auditor is going to tell the government himself regardless of what the client says?

BEC - 87 | 02/28
REG - 70 | 06/10, REMATCH | 08/30
AUD - XX | 09/10
FAR - XX | 12/10

[Author]

Replies