My Reading on ASQ CQA HB Part I-IA~IE-s

Part IE1
When Illegal or Unethical Activities Are Detected
An auditor finding evidence of wrongdoing, whether within or outside the scope of an audit assignment, has an
ethical duty to bring the matter to the attention of the client and appropriate management for action. The auditor
should keep a record of such matters, safeguard the evidence, and obtain copies of pertinent documents and
records (if necessary). The auditor must be aware of and apply the ethics of the profession and the law in this
regard. An auditor may ask the client about the company’s ethics policy and ethics department prior to
accepting the audit. If an ethics department exists, it may be a valuable resource if potentially unethical
situations surface before, during, or after an audit.
Management will take appropriate action on illegal or unethical activities within the company. This may involve
legal action of some type and the involvement of the auditor. Auditors should be aware of their legal
responsibilities and rights under the law, including whistle- blower laws.
If management sponsors allegedly illegal activities, either internally or externally, the auditor’s employment may
be threatened. An auditor should have access to legal counsel to resolve questionable issues. Often that legal
counsel is best if it comes from outside the company. The U.S. Congress and various states have passed laws
protecting people who report incidents of wrongdoing, including waste, fraud, and abuse (see a list of these
laws at http://www.ncsl.org/issues-research/labor/state-whistleblower-laws.aspx ). These whistle- blower
statutes (see Figure 5.3 for examples) protect auditors and others. Questions about specific laws should be
directed to the appropriate federal, state, or local authorities (see Figure 5.4 for an example of a local
regulation). Please note that Figures 5.3 and 5.4 are provided as examples and may be dated. An auditor faced
with a potential whistle- blower situation should seek the latest information available. It is sufficient to say that
whistle- blowers have some protection under both federal and some state laws; however, the amount of
protection and how it is applied depend on each situation.
Charlie Chong/ Fion Zhang