ACCA Strategic Professional · Advanced Audit and Assurance (International) · Money laundering
Marlow & Partners is the auditor of Pennant Ltd. Having reported a suspicion of laundering, the firm must decide whether to continue the audit and whether to sign the auditor's report. The firm fears that continuing may itself involve an offence and that the client may ask why the audit is delayed. Which course of action is most appropriate?
The firm should obtain legal advice, consult its MLRO and where necessary the authority, and consider the impact on the audit opinion and whether to resign, all without tipping off. Reporting does not remove the audit duties, and telling the board about the report would be an offence.
- AContinue the audit but delay the report indefinitely without informing anyone
- BResign immediately and inform Pennant's board that a suspicion report has been filed
- CSign the report on time since reporting to the authority fully discharges the firm's responsibilities
- DTake legal advice and consult the MLRO and authority as needed before proceeding, and consider whether the suspicion affects the audit opinion and whether resignation is appropriate, without tipping offCorrect
Explanation
The auditor must manage the dual duties: avoid tipping off while assessing the effect on the audit (for example, whether misstatement or non-compliance affects the opinion, and whether continuing the relationship is appropriate). Legal advice and consent from the authority may be needed before proceeding. Signing automatically ignores audit implications, and telling the board of the report is tipping off.
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