Accountancy Europe has released frequently asked questions explaining the role of the auditor in tackling financial crime, the legal basis of their responsibilities and what auditors can do in practice.
The publication is based on the information paper Auditor’s role in fighting financial crime published in December 2017, which outlined how auditors should follow up suspicious fraud or non-compliance activity with company management and authorities. Audit is not a guarantee against financial crime, the FAQ report highlighted, as there are limitations to the extent an auditor can legally tackle an issue, but auditors can increase the chances of detection.
According to the report, financial crime costs the EU economy €120bn (USD $148.7bn), compared to the total EU budget of €145bn, it also costs companies 5% of annual turnover, as well as reputational damage.
In order to address expectations from society on the auditors role, legislators and standard setters introduced; the EU Anti-Money Laundering Directive (AMLD), International Standards on Auditing (ISAs), and International Ethics Standards Board for Accountants (IESBA) standards.
Considering that the auditor contributes to the integrity of financial statements, it is important that the responsibility is shared with the company’s board and management to prevent, deter and uncover financial crime.
Accountancy Europe called for a coordinated approach from business leaders, the accountancy profession, regulators, standard setters and the financial sector to successfully tackle financial crime.