If auditors need to report a fraud to an authority in the public interest, who should they ask to make the report?

When auditors identify a situation that involves fraud and feels it is necessary to report it in the public interest, the appropriate course of action is to involve the directors of the company. This responsibility stems from the duty of directors to ensure compliance with legal and ethical standards related to financial reporting and governance.

Reporting to the directors is essential because they hold the ultimate responsibility for the entity's operations and are tasked with addressing any issues that may affect the company's integrity and reputation. Additionally, along with their legal obligations, directors have the authority to take necessary actions in response to the findings of the auditors, which may include initiating investigations, implementing corrective measures, or notifying the appropriate authorities if required.

Involving management or other stakeholders like shareholders may not capture the same level of responsibility given to directors, as management may not always have the same authority or independent perspective to act on serious findings like fraud. Directors, being part of the governing body, tend to have a clearer mandate to act in the broader interest of the company and its stakeholders, making them the most suitable choice for making such reports when public interest is a concern.