ACCA Strategic Professional · Advanced Audit and Assurance (International) · Money laundering
During the audit of Harbour Foods Co, a staff member, Priya, finds that the finance director has been routing cash from unrecorded sales through a personal account. Priya suspects the funds are criminal property. She tells her audit senior, who does nothing further. Under typical firm AML procedures, what should Priya have done?
Priya should report her suspicion promptly to the firm's MLRO and avoid discussing it with the client. The MLRO then decides on external reporting. Confronting the finance director or using the management letter risks tipping off and fails the duty to report promptly.
- AReport her suspicion internally to the firm's nominated officer (MLRO) promptly, and not discuss it with the clientCorrect
- BReport directly to the client's audit committee so management can explain the cash
- CWait until the audit is complete and then include the matter in the management letter
- DConfront the finance director to obtain an explanation before deciding whether to report
Explanation
Staff must make an internal report to the firm's nominated officer, who decides whether to submit an external report to the authorities. Raising it with the client or the finance director risks tipping off. Delaying the report to the management letter would also breach the requirement to report promptly.
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