ACCA Strategic Professional · Advanced Audit and Assurance (International) · Professional appointments

Fenwick & Co audits Orion Mining Ltd. During continuance review, the firm notes that Orion Mining Ltd has begun operating in a jurisdiction with high corruption risk, and the new finance team has refused to give the firm access to certain agent contracts. The firm has no other concerns. Which course of action is most appropriate?

The firm should reassess the engagement risks, considering possible non-compliance and whether the access restriction threatens its ability to obtain sufficient appropriate evidence, and discuss the matter with those charged with governance before deciding on continuance. High-risk location alone does not require resignation, and waiting until year end ignores the continuance obligation.

1. AContinue the engagement and treat the access restriction as a normal audit limitation to be dealt with in the audit report at year end, without further consideration of continuance
2. BImmediately resign, because operating in a high-risk jurisdiction automatically makes the client unacceptable
3. CReassess the risks, including legal and regulatory exposure and potential non-compliance with laws and regulations, consider whether the access restriction undermines the preconditions for an audit and the firm's ability to obtain sufficient appropriate evidence, and decide on continuance, discussing the matter with those charged with governanceCorrect
4. DNotify the relevant authorities at once, without first discussing the matter with management or those charged with governance