ACCA Strategic Professional · Advanced Audit and Assurance (International) · Money laundering
An audit partner has made a suspicious activity report about a client and now must decide whether to continue the audit. The client's management asks why the audit timetable has been delayed. Which response is most appropriate?
The partner should offer a neutral explanation for the delay that does not reveal the report. Disclosing that a suspicious activity report has been made, or probing the client about laundering, would risk tipping off, which is a criminal offence.
- AExplain that a report has been made to the authorities and that the firm is awaiting consent
- BGive a neutral, non-specific explanation for the delay without disclosing the reportCorrect
- CAsk the client to confirm whether it has laundered any funds
- DRefuse to answer and immediately withdraw from the engagement
Explanation
Disclosing the report would be tipping off, which is an offence. The firm should give a neutral explanation that reveals nothing. Asking the client about laundering also risks tipping off, and withdrawing without consideration is not required and may itself alert the client.
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