Auditing Question

You are not talking about the accounting issue in the client's book rather than it is an issue of the impendence and objectivity of an auditor.
As the audit fees for the last 3 years has not been settled, people may think that this service is not in the ordinary course of business or the fees are in dispute for 3 years. People may also think just like you why the auditor still spending so many cost every year for the audit but getting nothing from the client. Moreover, in technical point, the client is unable to pay off its creditors, a going-concern issue?
So, in an ethical and commercial sense, the auditor should get the settlement from the client immediately before starting up for the current year's or to decline for the continuity of the service by lodging formally a resignation letter for directors’ and shareholders’action.. This will discourage the client from using this unfair treat to the profession and to keep away from any unwarranted doubt on the ethical, integrity, independence and objectivity of any auditor in the community and the client too. Do something to put the professional auditor on something beyond doubt.

Auditing is a kind of business, why they dont get pay for 3 years ?

a. The Client do not accept the auditor's job.

b. The Client has no money to pay

Whatever reason, if Auditor cannot get payment overdue, why does he continue to do the service ? Its meaningless.

No one willing to do a job if its not able to get paid.

Depended on your case~

If your audit fee will never be settled afterward, you can wrote off the "accrued audit fee" and recogized as an income for the period.
(I think your boss never agree with that action)

In my experience, the accrued audit fee will be continued to recognized as liability no matter how old it has existed since auditor always have the expectation the audit fee will be paid (eventhough it never come true).

Because (1)the amount can be measurable, (2)the obligation is present and (3)the recover is highly probable. Under HKAS, the liability should continue to be recognized.

Delay in payment of audit fee may not be affect the independence and objectivity of audit work directly since it is none of our business as front line audit staff (eventhough our client pay the fee on time, we never got 1 cent bonus). If your firm is strong in bargain, the punishment may be charged.