Brave new world: how auditor responsibilities are changing

Consider this situation: during an external audit, the audit manager discovers a serious environmental regulation breach, supported by unequivocal evidence. The auditors take the issue to the client, who admits the infraction and subsequently makes a significant provision and related disclosures in the financial statements to avoid material misstatement, but does not remediate the severe environmental consequences. The issue is also raised with the Audit Committee, which agrees to the financial statement actions.

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