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You are the partner on the audit of OreCo Mining Group (OMG)
You are the partner on the audit of OreCo Mining Group (OMG). Fieldwork finished on Friday. It is now Monday and the Board of Directors are meeting tomorrow to sign the financial statements which your firm finished early Saturday morning.
Over the weekend, there began to be news reports of pollution coming from OMG's Noelville mine. You pull up an e-mail from your audit manager that reads as follows:
"I'm not sure how to deal with this but while on site I visited the tailings pond. I'm no expert but this is an environmental disaster waiting to happen. The sides are overgrown with willow trees and you can see cracks in the cement wall. It doesn't look like anything has been done to fix it in years. If the wall goes, there will be spillage into the French River and the entire watershed will be poisoned. I have no idea the cost to fix it, but the clean up and liability cost would be in the billions. I am purposefully not putting this in the evidence file but thought you should know."
With regards to the financial reporting and your audit report, what are your responsibilities?
Expert Solution
Every organization has the responsibility for the safety of the environment. No organization can legally work by harming the environment. When it comes to the life of people no organization can avoid it.
According to the mail if the wall goes, then there will be a spillage into the French river and the entire watershed will be poisoned. And for it, the cost will be nearly billions. Here as an Auditor, you have to think about the financial as well as an environmental situation. This situation will happen if there will be a natural disaster. But there is a possibility that natural disaster may not happen this year. But if it happens it will affect the environment and the lives of the people.
As an auditor your first responsibility for the safety of the organization. But the company is your client and is accepting its fault so you should give them a chance that they will rectify it and work to improve it. You should not directly report against them but you can find the alternatives and can make an agreement that they will work on this problem as soon as possible.
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