If a CPA encounters a problem with management that is refused, what should they do next?

In situations where a CPA encounters a problem with management that is unresolved, taking the issue to the Board of Directors and the audit committee is the appropriate course of action. This step is essential because the Board and the audit committee have the responsibility to oversee management and address serious issues that may impact the integrity of financial reporting or the overall governance of the organization.

Involving the Board of Directors and the audit committee ensures that there is an appropriate channel for reporting significant concerns, as these entities are tasked with ensuring that management acts in the best interest of the shareholders and maintains transparency. They also have the authority to initiate further investigation, seek external advice, or even make necessary changes in management if required.

This approach emphasizes the importance of maintaining proper communication and governance within an organization, allowing for escalation to those who can take appropriate actions when management is not responsive. Resigning from the engagement, reporting the issue to shareholders, or waiting for management to resolve the issue are less effective responses, as they do not encourage a proper resolution through the established corporate governance structure.