Resignation does not absolve the auditor of his responsibility to report suspected fraud or fraud as mandated by the law, said the National Financial Reporting Authority (NFRA), on Monday in a circular. The circular mentioned guidelines to the auditors in relation to reporting fraud in a company. The NFRA also highlighted that auditors are duty-bound to report fraud to the central government even in cases where they are not the first persons to identify them. The circular further instructed auditors to exercise their own professional skepticism while evaluating fraud, and need not be influenced by legal opinion provided by the company or its management. As per the Companies Act 2013, the Companies (Auditor’s Report) Order (CARO) which is an audit report format, and the Standards on Auditing (SAs), the auditors are under a mandatory obligation to report fraud or suspected fraud if they observe suspicious activities or transactions.

Source: Economic Times June 27, 2023 12:01 UTC