Professional accountants can face a moral and ethical dilemma if they decide, after following the procedures in the ED or in AU-C section 250, that an employer or client has committed an
illegal act. Ethically, the issue is resolved by following the standards in effect at the time, remembering that even a CPA working in industry must comply with the AICPA Code of Professional Conduct or the IESBA standards, whichever is applicable.
(d) It ordinarily is not the auditor's responsibility to disclose an
illegal act to parties other than the client's senior management and its audit committee or board of directors, and such disclosure would be precluded by the auditor's ethical and legal obligations.
McEnroe and Martens (2001) report that expectation gaps continue to exist in six dimensions of the audit--including fraud, internal controls, and
illegal acts. As suggested by Porter (1993), we analyze these expectation gaps in order to identify possible remedial actions, that is, actions that may narrow the expectations gaps identified by McEnroe and Martens (2001).
Internal control review and tests may aid in the detection of
illegal acts by uncovering unauthorized transactions, improperly recorded transactions and incomplete or untimely recording of transactions.
In August 2012, the IESBA published an exposure draft, Responding to a Suspected
Illegal Act. If adopted, it will change the IESBA's Code of Ethics for Professional Accountants by providing circumstances in which an auditor who follows those standards can override the fundamental principle of confidentiality and disclose a suspected
illegal act (including fraud) to an appropriate authority.
You are not required to perform any additional procedures or search for fraud or
illegal acts. However, during the performance of compilation or review procedures, such as inquiries or analytical procedures in a review or reading the financial statements in a compilation, if any evidence or information comes to your attention regarding fraud or an
illegal act, you should request that management consider the effect of the matter on the financial statements and you should consider its effect on the compilation report.
Thus, by allowing women to work in this area to avoid committing an
illegal act, the company may be subject to future liability claims filed on behalf of any injured children born to these women (or men).
The employees also held a press conference at the DFO's office against what they called
illegal act by the Levies personnel.
He added that this act will not be covered/saved from the section of 13 of Sindh Revenue Board Act 2011, since the malafide intention and
illegal act was done with ultra vires motives and misusing the powers which were never conferred with them and as result loss of the national exchequers to great extend.
Mukhopadhaya observed that if, on scrutiny, any conversation revealed any criminal or
illegal act, the matter " will go to a court of law".
In addition to the two new standards, ARSC also has issued an interpretation of SSARS 10 to provide guidance as to the steps the accountant should take to perform the required communication when, during performance of a compilation or a review engagement, the accountant suspects that a fraud or an
illegal act may have occurred.
