Passive duty

It doesn’t mean “not allowed” it means “not active”.
The auditor has an active responsibility in relation to subsequent events until he signs the auditor’s report. His responsibility to report on the financial statements is then “done” and he is under no obligation to do anything actively in relation to those financial statements.
However, he has a responsibility to react to relevant matters that come to his attention – this is described as a passive duty.

So, for example, in relation to litigation – the auditor has an active duty to make enquiries of lawyers concerning legal claims before he signs the auditor’s report. He doesn’t have to make continued enquiries after that date. If, however, he becomes aware of a major lawsuit (he reads about it in the press) he would need to respond to that.