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suspected fraud by TWCG

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AA Exams › suspected fraud by TWCG

  • This topic has 1 reply, 2 voices, and was last updated 4 years ago by Kim Smith.
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  • June 30, 2021 at 3:43 am #626657
    Noah098
    Member
    • Topics: 935
    • Replies: 352
    • ☆☆☆☆☆

    “If the auditor has doubts about the integrity of those charged with governance they should seek legal advice regarding an appropriate course of action.”

    ma’am i wanted to know why can’t the auditors seek management’s advice if TWCG is unscrupulous? why seek legal advice first?

    June 30, 2021 at 7:54 am #626681
    Kim Smith
    Keymaster
    • Topics: 135
    • Replies: 8309
    • ☆☆☆☆☆

    Because where management and TCWG are not the same, management is subordinate to TCWG. If the audit client is listed, we are talking about the auditor doubting the integrity of the audit committee – that’s pretty serious!

    Or where management and TCWG are one and the same (i.e. just a board of directors) there would clearly be no point seeking management’s advice.

    What the standard (ISA 240) actually states is:

    “In the EXCEPTIONAL circumstances where the auditor has doubts about the integrity or honesty of management or TCWG, the auditor MAY consider it appropriate to obtain legal advice ….”

    The thing about fraud is that until a court determines “there is fraud”, there can only be suspicion – so the auditor must be very careful not to damage reputations(!)

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