Why would auditors resign?

[Clariman]

Why would auditors resign from working with a client - a privately owned SME.?

[YeeWo]

- Conflict of interest? They may have extensive dealings with a large counter-party debtor/creditor?
- The SME may be being wilfully obstructive.
- The auditor may not have the resource to do the work. sickness/absenteeism etc.
- The SME may not have the resources to fund the work?!

A whole myriad of reasons from understandable to completely fraudulent and everything in between.

[dspp]

The SME may be about to fail the going concern test and it is simpler to just not be their auditor ?

[Clariman]

Thanks. Interesting

[DiamondEcho]

>> '- The SME may be being wilfully obstructive.'

I've seen this myself. Auditing is lucrative work, and opens up many other channels for services from the provider. They want to retain the business 'big time'. But as auditors their reputation is on the line to abide by accounting principles.

So if you have an audit that highlights material issues, at worst the audited accounts will be 'qualified' by the auditor. I.e. deemed as scrutinised but 'we as auditors cannot sign off on them as a fair and reasonable reflection on the state of affairs of this business, due to [x/y/z]'. For example how the EUs auditors haven't signed off the EU accounts for 20-odd years now [and this used to be a major year by year scandal, but people don't even notice any more].

So arrival at the final issues an audit report notes can be a huge tug-of-war, esp. for a blue-chip named audit client an auditor is seeking to keep sweet.

[Generali]

>> '- The SME may be being wilfully obstructive.'

I've seen this myself. Auditing is lucrative work, and opens up many other channels for services from the provider. They want to retain the business 'big time'. But as auditors their reputation is on the line to abide by accounting principles.

So if you have an audit that highlights material issues, at worst the audited accounts will be 'qualified' by the auditor. I.e. deemed as scrutinised but 'we as auditors cannot sign off on them as a fair and reasonable reflection on the state of affairs of this business, due to [x/y/z]'. For example how the EUs auditors haven't signed off the EU accounts for 20-odd years now [and this used to be a major year by year scandal, but people don't even notice any more].

So arrival at the final issues an audit report notes can be a huge tug-of-war, esp. for a blue-chip named audit client an auditor is seeking to keep sweet.

The EU accounts have been signed off every year since 2007. That's probably why the accounts not being signed off is not an issue as they are signed off.

Mrs Generali is an auditor and generally audit work just about washes its face financially and is used as a way to build a relationship with a firm in order to sell higher profit work such as consultancy.

The main reason for sacking a client is because they are so slow at producing the files required that the audit ends up loss making.