Auditing and Assurance Standards and Guidance

Auditing Standards (Ireland)

FRC ISAs (UK and Ireland) applicable for periods beginning on or after 15 December 2010 but before 17 June 2016

ISA (UK and Ireland) 250A Consideration of laws and regulations in an audit of financial statements

Application and Other Explanatory Material

Reporting of Identified or Suspected Non-Compliance

Reporting Non-Compliance to Regulatory and Enforcement Authorities (Ref: Para. 28 )

The auditor's professional duty to maintain the confidentiality of client information may preclude reporting identified or suspected non-compliance with laws and regulations to a party outside the entity. However, the auditor's legal responsibilities vary by jurisdiction and, in certain circumstances, the duty of confidentiality may be overridden by statute, the law or courts of law. In some jurisdictions, the auditor of a financial institution has a statutory duty to report the occurrence, or suspected occurrence, of non-compliance with laws and regulations to supervisory authorities. Also, in some jurisdictions, the auditor has a duty to report misstatements to authorities in those cases where management and, where applicable, those charged with governance fail to take corrective action. The auditor may consider it appropriate to obtain legal advice to determine the appropriate course of action.

A19-1.

Legislation in the UK and Ireland establishes specific responsibilities for the auditor to report suspicions regarding certain criminal offences (for example, in relation to money laundering offences (see paragraph A11–2) and, in the Republic of Ireland, indictable offences under company law and the Criminal Justice (Theft and Fraud Offences) Act 2001). In addition, the auditor of entities subject to statutory regulation^11b, has separate responsibilities to report certain information direct to the relevant regulator. Standards and guidance on these responsibilities is given in Section B of this ISA (UK and Ireland) and relevant APB Practice Notes.

A19-2.

The procedures and guidance in Section B of this ISA (UK and Ireland) can be adapted to circumstances in which the auditor of other types of entity becomes aware of a suspected instance of non-compliance with laws or regulations which the auditor is under a statutory duty to report.

^11b Auditors of financial service entities, pension schemes and, in the UK, charities have a statutory responsibility, subject to compliance with legislation relating to 'tipping off' or 'prejudicing an investigation' (see footnote 4a), to report matters that are likely to be of material significance to the regulator.