Auditor’s Responsibilities For Investigating And Detecting Illegal Employment Activities By Audit Clients

Abstract

Asking the auditor to be responsible for detecting illegal employees is a far reach. This is management’s responsibility. However, this paper discusses why the auditor may have an obligation to expand audit procedures to investigate the possibility of illegal hiring practices. When the client is operating in an area or industry where illegal employees are commonly used, then the auditor should use an attitude of professional skepticism and beware of illegal employees being used by the company. Inquiries and observations procedures may indicate potential illegal hiring practices. Also, discussions with management and other employees should be performed as well as a thorough review of board minutes. The procedures performed by the auditor in gaining an understanding of the entity and its environment as well as in the search for illegal acts may identify situations where the hiring of illegal employees is a possibility. One of the main issues raised in the article is the impact on the level of trust that needs to exist between the client and the auditor.