ACCA Strategic Professional · Advanced Audit and Assurance (International) · Money laundering
During the audit of Brightvale Ltd, the auditor identifies a suspected money laundering offence that is not material to the financial statements. Which statement best describes the auditor's position?
The suspicion should still be reported via the MLRO, because the duty to report arises from suspicion and is independent of financial statement materiality. The auditor does not need to prove laundering or obtain management's agreement before reporting.
- ANo report is needed because the amount is immaterial to the financial statements
- BThe suspicion should still be reported through the firm's MLRO, because reporting duties do not depend on materialityCorrect
- COnly report if the client's management agrees that the transactions are suspicious
- DReport only after performing extended procedures to prove that laundering occurred
Explanation
Money laundering reporting obligations arise from suspicion, regardless of the amount or materiality to the financial statements. The auditor need not prove the offence or obtain management's agreement; the suspicion must be reported through the MLRO.
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