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Hello Kim
hope u are doing good.as an auditor what should I do if come across a situation that may suggest my client is involved in money laundering.? is it allowed to complete the audit of a client that is involved in money laundering assuming that the auditor is aware of the money laundering.
Hello! Yes, thank you!
Auditor’s responsibilities are summarised on page 33 of the notes.
Essentially, an individual audit staff member would discuss with the engagement partner (for example) who would then report it to the firm’s MLRO – who is the person who would take this further in reporting suspicion to the relevant authority.Absolutely it is allowed to complete the audit because not to do so might “tip off” the client. When reporting suspicion to the relevant authority, the MLRO may ask for “appropriate consent” to continue to act – this is an extract from some UK guidance (not examinable):
“For example, if the auditor suspected that the audit report was necessary in order for financial statements to be issued in connection with a transaction involving the proceeds of crime, or if the auditor was to sign off an auditor’s report on financial statements for a company that was a front for illegal activity, the auditor might be involved in an arrangement which facilitated the acquisition, retention, use or control of criminal property under section 328 of POCA. In these
circumstances, in addition to the normal procedures, the auditor would generally need to
obtain appropriate consent from SOCA via the MLRO as soon as is practicable.”
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