Acca aaa s21 Notes

September 2021 to June 2022 exams
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September 2021 to June 2022 exams
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Chapter 6
RESPONDING TO NON-COMPLIANCE 
WITH LAWS AND REGULATIONS 
(NOCLAR)
1. Introduction
This chapter deals with how the auditor should respond to a client’s failure to comply with laws and 
regulations. Potentially, non-compliance will lead to fines, penalties and damages and these should 
be recognised as liabilities or contingent liabilities. Additionally, non-compliance might cause going 
concern issues if the company is then prohibited from trading or the non-compliance damages the 
reputation of the company to such an extent that its survival is threatened.
ISA 250 
Consideration of Laws and Regulations in the Audit of Financial Statements
is relevant. In 
addition, IESBA's pronouncement Responding to Non-Compliance with Laws and Regulations 
(NOCLAR) provides a framework for how professional accountants should act in the public interest, 
when they become aware of or suspect NOCLAR.
NOCLAR is defined as acts of commission or omission, intentional or unintentional, committed by a 
client or TCWG... contrary to laws or regulations. The definition excludes personal misconduct (i.e. 
unrelated to business activities).
The ethical standard permits accountants to set aside the duty of confidentiality in order to disclose 
NOCLAR rather than simply resign.