The Arizona Revised Statutes have been updated to include the revised sections from the 53rd Legislature, 2nd Regular Session. Please note that the next update of this compilation will not take place until after the conclusion of the 54th Legislature, 1st Regular Session, which convenes in January 2019.
This online version of the Arizona Revised Statutes is primarily maintained for legislative drafting purposes and reflects the version of law that is effective on January 1st of the year following the most recent legislative session. The official version of the Arizona Revised Statutes is published by Thomson Reuters.
44-2123. Audit discoveries; required responses
A. In the course of conducting an audit to which this article applies, if the independent certified public accountant detects or becomes aware of information indicating that an illegal act, whether or not perceived to have a material effect on the issuer's financial statements, has or may have occurred, the independent certified public accountant, in accordance with generally accepted auditing standards, as modified or supplemented by the commission, shall:
1. Determine whether it is likely that an illegal act has occurred and, if so, shall determine and consider the possible effect of the illegal act on the financial statements of the issuer, including any contingent monetary effects such as fines, penalties and damages.
2. As soon as practicable, inform the appropriate level of the issuer's management and ensure that the issuer's audit committee or board of directors in the absence of an audit committee is adequately informed about any illegal acts that have been detected or have otherwise come to the attention of the certified public accountant in the course of the audit, unless the illegal act is clearly inconsequential.
B. After determining that the audit committee or board of directors is adequately informed pursuant to subsection A, as soon as practicable, the independent certified public accountant shall report the accountant's conclusions to the board of directors if the independent certified public accountant concludes that all of the following have occurred:
1. The illegal act has a material effect on the financial statements of the issuer.
2. The senior management has not taken, and the board of directors has not caused senior management to take, timely and appropriate remedial actions with respect to the illegal act.
3. The failure to take remedial action is reasonably expected to warrant departure from a standard report of the auditor, when made, or warrant resignation from the audit engagement.
C. Unless exempted by the commission by rule or order, an issuer whose board of directors receives a report pursuant to subsection B shall inform the commission by written notice within one business day after receiving the report and shall furnish the independent certified public accountant making the report with a copy of the written notice. If the independent certified public accountant fails to receive a copy of the notice within the required period, the independent certified public accountant, within one business day after the failure to receive a copy of the notice, shall resign from the engagement, give the commission a copy of the accountant's report or give the commission the documentation of any oral report.
D. If an independent certified public accountant resigns from an engagement pursuant to subsection C, the independent certified public accountant, within one business day after the failure to receive a copy of the notice, shall give the commission a copy of the accountant's report or the documentation of any oral report.