SA 240: Auditor's Responsibilities - Fraud#
Definition of Fraud#
An act involving use of deception to obtain an unjust or illegal advantage.
Types of Fraud#
1. Misstatements Arising from Fraud
- Financial statement fraud
- Misappropriation of assets
Responsibilities#
- Obtain reasonable assurance
- Plan and perform audit with professional skepticism
- Respond appropriately to fraud risks
Risk Assessment#
Inquiries of Management
- Fraud risk identification
- Controls to mitigate risks
- Past instances of fraud
Analytical Procedures#
- Identify unusual relationships
- Fluctuations beyond expectations
- Non-routine transactions
Responsive Procedures#
- Changing nature, timing, extent
- Management override risk
- Specific high-risk areas
Evaluation#
- Document findings
- Communicate to those charged with governance
- Consider implications for audit opinion