ACCA Strategic Professional · Advanced Audit and Assurance (International) · Laws and regulations
A firm is asked by a former client's successor auditor for information about why the firm resigned. The firm's partner suspects the client concealed a legal breach. Under the IESBA Code on confidentiality, what should the outgoing auditor do?
The outgoing auditor should ask the client for permission to discuss its affairs with the successor. If the client refuses, the auditor should not disclose except where a legal or professional duty or right to do so exists, and should take legal advice, because confidentiality continues after the engagement ends.
- AProvide all audit files to the successor without any consent
- BRefuse to speak to the successor under any circumstances
- CSeek the client's permission to discuss the client's affairs, and if permission is refused, consider legal advice on any obligation or right to disclose, without breaching confidentiality otherwiseCorrect
- DTell the successor only verbally and informally, since oral statements are not confidential
Explanation
The duty of confidentiality continues after the engagement ends. The outgoing auditor should ask the client for permission to respond to the successor's enquiries; if refused, the outgoing auditor should not disclose unless a legal duty or right to disclose applies, which is where legal advice helps. Oral statements are not exempt from confidentiality.
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