Can the client restrict the existing auditor from sharing fraudulent activities of his business, with the incoming auditor...??
CA.Tarun Maheshwari
(CA, DISA)
(7150 Points)
Replied 15 February 2009
Well, good question. I would also like to be updated on this matter.
Pulkit Agarwal
(CA. Final)
(455 Points)
Replied 08 March 2009
not at all. The outgoing Auditor Can't be expected to conceal such information. it is evident from the legal requirement that ,
The Incoming auditor is required (Under Schedule 1, Part !, Clause 8) of the CA Regulation Act to ask the outgoing auditor of Any Reasons why not to take up the audit. It is therefore the duty of the outgoing auditor to inform the new auditor about any significant area of concern.
This position is also specifically excluded from the auditor's duty of confidentiallity as imposed by AAS 1
VIJENDRA DARGAR
(JOB)
(95 Points)
Replied 09 March 2009
AN AUDITOR IS NOT ALLOWED TO DISCLOSE INFORMATIONS OF HIS CLIENT'S BUSINESS EXCEPT WITH THE PERMISSION OF CLIENT OR WHERE LAW REQUIRED TO DISCLOSE SUCH INFORMATION. BUT, HE IS NEITHER REQUIRED NOR RESTRICTED TO DISCLOSE ABOUT FRAUDULENT ACTIVITIES OF HIS CLIENT'S BUSINESS TO THE INCOMING AUDITORS. IF EXISTING AUDITOR RESIGNS DUE TO SUCH FRAUDULENT ACTIVITIES, HE MUST INFORM THE REASONS THEREOF TO THE INCOMING AUDITOR.
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