Spotlight on Fraud

Spotlight on Fraud

• 15 November 2022
• Accounting
• South African Accounting Academy

In revising this standard, the IAASB aims to:

• Clarify the role and responsibilities of the auditor for fraud in an audit of financial statements.
• Promote consistent behaviour and facilitate effective responses to identified risks of material misstatement due to fraud through strengthening ISA 240 to establish more robust requirements and enhance and clarify application material where necessary.
• Enhance ISA 240 to reinforce the importance, throughout the audit, of the appropriate exercise of professional skepticism in fraud-related audit procedures.
• Enhance transparency on fraud-related procedures where appropriate, including strengthening communications with TCWG and the reporting requirements in ISA 240 and other relevant ISAs

The IAASB will continue to deliberate these issues and plans to approve an Exposure Draft for public comment in September 2023.

Areas highlighted in the project proposal include:

• The introduction, including the role and responsibilities of the auditor relating to fraud in an audit of financial statements;
• Specialized skills;
• Communication with those charged with governance
• Identifying and assessing the risks of material misstatement due to fraud;
• Presumption of fraud risk in revenue recognition;
• Journal entries; and
• Transparency in the auditor’s report on fraud.

Click here to access the project webpage:

https://www.iaasb.org/consultations-projects/fraud?utm_source=Main+List+New&utm_campaign=cb825d8ffc-IAASB_eNews_7_7_21_COPY_01&utm_medium=email&utm_term=0_c325307f2b-cb825d8ffc-80727052

Relevance to Auditors, Independent Reviewers & Accountants:

• As an auditor and independent reviewer, you need to comply with International Standards on Auditing and other Assurance Services, and thus you need knowledge of newly revised standards that are approved as well as when they become effective.
• Failure to adhere to ISAs may be interpreted as negligence and you could be held liable.
• As an auditor and independent reviewer, you should be aware of proposed changes to existing standards issued by the standard-setting bodies, e.g. the IAASB.

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