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Sir for example it has been found in the audit that client is paying bribe to win a contact, so should we perform procedure on relevent account head in which the payment of bribe has been recorded to check whether any further amount has been paid as a bribe.
The auditor’s responsibilities concern only risks of MATERIAL misstatement “whether due to fraud or error” – e.g. the following precised points are taken from ISA 330:
“If misstatements that the auditor did not expect when assessing the risks of MATERIAL misstatement are detected … the auditor shall evaluate whether the
related assessment of risk and the planned nature, timing, or extent of substantive
procedures need to be modified.”“A MATERIAL misstatement detected by the auditor’s procedures is a strong indicator of
the existence of a significant deficiency in internal control.”“When the auditor concludes that the planned nature, timing, or extent of substantive
procedures need to be modified as a result of unexpected misstatements detected …, such modification may include extending procedures performed.”The auditor would have to consider in what way does a “facilitation payment” constitute a misstatement – if any? If the payments were to a related party there would be disclosure requirements to be met (IAS 24) which should be disclosed to the auditor for the auditor to audit – it’s not the auditor’s task to search all records and prepare that disclosure.
Even if the auditor is required to report actual or suspected non-compliance with laws or regulations regardless of materiality (e.g. under bribery/money laundering regulations), that would not require the auditor to “audit” the bribe. That would be a matter for investigating authorities to determine.
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