Case 1.7 Lincoln Savings and Loan
After joining ACC, Atchison was no longer bond to follow the various auditing regulations. As such, technically he was allowed to interact with Young’s auditors. He also waited until after the audit was concluded to prevent any SEC violations. Ethically he probably should not have interfaced with Arthur Young’s auditors. But being that he had experience and personal relationships with Arthur Young, it would have been in ACC’s best interest (although deceitfully) to have him attempt to persuade the auditors to agree to ACC’s reporting methods.
9) If fraud is detected throughout the course of their work, than they have a responsibility to report it to the clients and their own management teams. However it is not the primary responsibility of the auditor to uncover fraud. As pointed out in AU 316 paragraph 4 “it is management's responsibility to … detect fraud.” The auditor is there to give an independent opinion on the reliability of the financial statements. http://pcaobus.org/Standards/Auditing/Pages/AU316.aspx
Factors that mitigate this responsibility to uncover fraud include properly