What is the consequence of resigning from an engagement due to concerns about tax planning schemes?

When a professional accountant resigns from an engagement due to concerns about potential tax planning schemes, the most appropriate course of action is to report the resignation to the tax authority without providing specific details. This is in line with ethical obligations and the duty to uphold the integrity of the profession.

By notifying the tax authority, the accountant takes a responsible step to ensure that any questionable practices are brought to the attention of the appropriate regulatory body, which can investigate further if necessary. This action helps protect the public interest and maintain trust in the tax system.

The other responses may not address the situation effectively. Changing the engagement terms with the client could imply the accountant is willing to continue working under potential unethical circumstances, which contradicts the importance of professional integrity. Suing for misrepresentation does not align with the immediate concern of ethical practice; instead, it focuses on legal recourse, which may diverge from the core issue at hand. Transitioning the engagement to another firm, while it may seem like a practical solution for the client relationship, does not adequately fulfill the obligation to report concerns about potentially illegal or unethical tax strategies. Therefore, reporting the resignation ensures that any unethical behavior is formally recognized and adequately addressed.