What auditors doThe outside, independent auditor is engaged to render an opinion on whether a companys financial statements are presented fairly, in all material respects, in accordance with the financial reporting framework. The audit provides users such as lenders and investors with an enhanced degree of confidence in the financial statements. To form the opinion, the auditor gathers appropriate and sufficient evidence and observes, tests, compares, and confirms until gaining reasonable assurance. The auditor then forms an opinion of whether the financial statements are free of material misstatement, whether due to fraud or error. The auditor cannot force/ insist but provide suggestions and advise the auditee on any action to be taken. In the given question, he can only advise to write off the balance. Hiding the facts from management is not the right thing to do. Note: The auditor can never provide recommendations. Therefore, During the course of an audit, the auditor stumbled upon a balance of Rs. 12,500 in the Goodwill A/c and ascertained that it had not been written off over a long period. The auditor will advise the concern to write it off.