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ACCA Strategic Professional · Advanced Audit and Assurance (International) · Money laundering

During the audit of Calder Plc, a staff member discovers that the finance director has been depositing cash from an unexplained source into a company account. The audit firm's procedures require internal reporting of suspicions. To whom should the staff member first report the suspicion?

The staff member should report to the firm's MLRO or nominated officer. The MLRO evaluates the suspicion and decides whether to report externally. Approaching the finance director or the client's governance bodies could amount to tipping off and would not follow the firm's internal reporting procedures.

  1. AThe firm's money laundering reporting officer (MLRO) or equivalent nominated personCorrect
  2. BThe client's audit committee chair, to obtain an explanation
  3. CThe finance director, to give an opportunity to clarify the deposits
  4. DThe external law enforcement authority directly, bypassing the firm

Explanation

Firm procedures require staff to report suspicions internally to the MLRO, who decides whether an external report to the authorities is needed. Raising it with the finance director or the audit committee risks tipping off. Staff generally satisfy their duty by reporting to the MLRO.

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