What is the$$ auditor's responsibility when$$ non$-$compliance with laws and regulations is identified or$$ suspected?

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Part $1$

A$.$

The auditor must immediately stop the audit process of the company. The audit partner in charge must be brought in to review the audit as is and determine if there is enough documentation to substantiate noncompliance. The audit partner must then take the information to the board of directors as well as management at a level above those involved with the suspected noncompliance. The three parties must then make a determination of how best to proceed with the information.

B$.$

The auditor should document the as much information they can obtain regarding the noncompliance act. This information should not be given to the$$ client, but should go directly to an outside audit firm to evaluate the results to confirm the noncompliance with laws or regulations. If the second firm also$$ agrees, the$$ auditor's responsibility is to take the information directly to the board of directors of the company to discuss options to rectify the noncompliance.

C$.$

The auditor should obtain an understanding of the nature and circumstances of the act. Additional information should be$$ obtained, and the auditor should discuss the matter with management at a level above those involved with the suspected noncompliance. If$$ needed, the auditor should also consider the need to obtain legal advice.

D$.$

The auditor must change the level of materiality and scope of the audit engagement to ensure it includes the identified or suspected noncompliance information.$$ Therefore, any of the audit work that has already been completed must be recomputed using the new audit scope. Management does not need to be notified why the scope of the audit has been changed unless the auditors find substantiated information.