Question

What if the prior auditor left because the client company was engaging in fraud or tax evasion?

Answer 1

Answer :-

First of all let us recall the who is auditor and what is his duty and responsibility towards a company.

Company financial statements are the basic documents for decision making purpose by various stake holders ranging from financial creditors, trading creditors and investors etc. But financial statements are prepared by company itself . Then how one could rely on the authenticity of the financial statements. Here requires a third and independent party who does not have any interest and stake in the company so that his opinion does not favour the company.

In a nutshell the duty of the auditor is to express free and fair opinion on the preparation of financial statements.

Lefting the job is at the discretion of the auditor but he must inform that the company has been engaging in fraud and tax evasion. Else he would be held liable for not expressing the same.

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