Problem:
The first place the auditor in charge should go on arriving at a company is to visit the CEO. This is important to touch base with the CEO and get any comments the CEO may have. I know of one case where this visit provided the auditor some important information that would not be known for at least a month. The CEO admitted insider trading of the company stocks and in a meeting with the board reached an agreement. The CEO would resign in one month, pay back the profit made on the trades and the board would accept the resignation and there would be no disclosure of what happened. The CEO asked the auditor not to disclose what had happened as there was no financial harm to the company.
Do you believe that this situation would have to be disclosed by the auditor?