You are an accountant responsible for auditing the books of Money Corp. You have identified what...

You are an accountant responsible for auditing the books of Money Corp. You have identified what appear to be serious irregularities in the way that Money Corp is tracking its assets. What are you required to do with this information? If that first action is unsuccessful, what should you do next? What are the consequences that you may face if you fail to act? Reference the applicable laws in answering this question.

Expert Solution

Action to be taken: The accountant responsible for auditing the books shall report the matter in audit report.

As per ISA 700, If the auditor: (a) concludes that, based on the audit evidence obtained, the financial statements as a whole are not free from material misstatement; or (b) is unable to obtain sufficient appropriate audit evidence to conclude that the financial statements as a whole are free from material misstatement, the auditor shall modify the opinion in the auditor’s report in accordance with ISA 705.

If financial statements prepared in accordance with the requirements of a fair presentation framework do not achieve fair presentation, the auditor shall discuss the matter with management and, depending on the requirements of the applicable financial reporting framework and how the matter is resolved, shall determine whether it is necessary to modify the opinion in the auditor’s report in accordance with ISA 705. (Ref: Para. A11).

If unable to take action as mentioned above: Auditor should discuss with those charged with governance and withdraw from engagement.

As per ISA 260 requires the communication of matters that are not relevant to the oversight role, or are insufficiently important to audit quality to merit being mandatory. .

ekkarill92 answered 2 years ago

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