Page 49 - AAA Integrated Workbook STUDENT S18-J19

Professional responsibilities and liability

1.5 Reporting of non-compliance

Those
rd
Management charged with 3 parties Shareholders
governance

Communicate If the non- If there is a
the non- compliance is a duty to By modifying the
compliance on deliberate act report e.g. to auditor’s opinion
a timely basis by management a regulator

1.6 Withdrawal from the engagement

The auditor may decide that they need to withdraw from the engagement (i.e. resign
as auditor) if:

 The non-compliance with laws and regulations is so serious that they can no
longer maintain a client relationship.

 There has been a breakdown of trust between the auditor and management.

 The auditor has doubts about the competence of management.

The auditor should seek legal advice before taking this course of action.

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