Guidance related to Rule B1.6: Company Audit Enquiries

Solicitors acting for companies should maintain records of incidents of non-compliance by the company of laws and regulations which have been reported to them or discovered by then in the course of acting for the company.

If in the course of conducting an audit, the auditors request details of any actual or potential non-compliance with the laws and regulations which are central to the conduct of the company's business of which the practice unit is aware, care should be taken in responding. Firstly, solicitors should not respond to such enquiries without the client company's express agreement. Secondly, some requests for information may go beyond those to which it is appropriate for the company's legal adviser to reply. Information which has traditionally been requested of solicitors as legal advisers to companies has included information as to titles, outstanding fees and any consultation with the solicitor with regard to litigation involving the company. It is appropriate to respond to these types of question. It must be stressed, however, that requests for information falling outwith these areas such as whether the solicitor is aware of any matter where the company may have failed to comply with the law or regulatory standards, or whether the solicitor is aware of any contingent liability other than litigation matters which he or she has been consulted on, should always be referred to the company's directors and no response should be made other than on the specific instructions of directors. Failure to do so could potentially open a company's legal adviser to risk.

Provision of an auditor's letter or certificate is an important step in the audit process which has to be handled with care, takes time and carries significant risk for the solicitor giving it. For all these reasons, he or she is entitled to make an appropriate charge.

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