In: Accounting
16. Name three ethical reasons why an auditor might not seek re-election or might resign, explaining the nature of the problem and the reasoning behind the resignation
16.
1. Integrity of management : Auditor might feel that he has reason to doubt management integrity , Auditor doesnt feel that client is trustworthy
2. for fees level: the audit fee which is necessary to carry out audit at a profit may have reached a level which is not appropriate according to ACCA guidelines on fee level of public interest entity.if the audit fee more than 15 % of total practice income this is considered as independence problem, due to auditor opinion might be change having fear to lose client,
so in this condition audit to end the relationship to ensure that he did not become dependent on the client.
3. other services:
Auditor may offier various services to client, he may be offered some lucrative consultancy work by client which he want to undertake,but due to this he feels that his more involvement in client business and indenpendence of audit affected.
so as the audit fee lower than fees associated with consultancy work , audit is trying to develop his business service department , he may resign from the audit to take consultancy