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Auditing & Assurance › Fraud & Error Responsibilities

What reporting obligations may arise when the auditor identifies fraud?

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Answer

Beyond communicating to management/governance, the auditor may have duties to report to regulators or authorities depending on jurisdiction and the nature of the fraud (e.g., money laundering, regulated entities), overriding confidentiality in some cases. The auditor also considers implications for the report and may seek legal advice. Documentation of decisions is essential.
Real-world example Suspecting money laundering, the auditor makes the legally required report to the authorities despite client confidentiality.

Common follow-ups: When can confidentiality be overridden? | Who might the auditor report to?

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All 18 Fraud & Error Responsibilities questions