Question

If you were the auditor for a company who has recently recieved negative media and publicity, (which also led to a decrese in sales) hiw wiuld this effect your auditing plan if you were the lead partner?

Answer 1

AS per ISA 315 the auditor shall obtain an understanding of the entity and its environments and its complies with the legal and regulatory framework of that industry. It is important that the auditor remains alert in all circumstances to such non compliance.

Adverse media comments and negative publicity is one of the indicators of non compliance of legal and regulatory framework it is operating in. The audit procedure to be followed or be included in the audit plan as a response to the above shall be

1.obtain an understanding of the nature of the act and circumstances

2.obtain further information to evalaute the possible effect of such noncompliance( Here in the given case, reduction in sales, also consider the necesary steps for revival of the same)

3.Discuss with the management and those charged with the governanace

4.Consider the need to obtain legal advice if required if suffivient information is not provided and the matter is material.

5.evaluate the effect in auditors opinion (Qualification or disclaimer as appropriate)

6.Evaluate the implications on risk assessment and reliabilty of written representations.