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This
Statement:
l
Distinguishes fraud from error and describes
the two types of fraud (misstatements resulting from fraudulent
financial reporting and misstatement from misappropriation of
assets) that are relevant to the auditor.
l
Describes the respective responsibilities of
those charged with governance and the management of the entity for
the prevention and detection of fraud; as well as the inherent
limitations of an audit in the context of fraud; and set out the
responsibilities of the auditor for detecting material misstatements
due to fraud.
l
Requires the auditor to maintain an attitude of
professional skepticism recognizing the possibility that a material
misstatement due to fraud could exist, notwithstanding the auditor’s
past experience with the entity about the honesty and integrity of
management and those charged with governance.
l
Requires members of the engagement team to
discuss the susceptibility of the entity’s financial statements to
material misstatement due to fraud and requires the engagement
partner to consider which matters are to be communicated to members
of the engagement team not involved in the discussion.
l
Provides guidance on communications with
regulatory and enforcement authorities.
l
Provides guidance if, as a result of a
misstatement resulting from fraud or suspected fraud, the auditor
encounters exceptional circumstances that bring into question the
auditor’s ability to continue performing the audit.
l
Establishes documentation requirements.
l
Requires the auditor to:
n
Perform procedures to obtain information that
is used to identify the risks of material misstatement due to fraud.
n
Identify and assess the risks of material
misstatement due to fraud at the financial statement level and the
assertion level; and for those assessed risks that could result in a
material misstatement due to fraud, evaluate the design of the
entity’s related controls, including relevant control activities,
and to determine whether they have been implemented.
n
Determine overall responses to address the
risks of material misstatement due to fraud at the financial
statement level and consider the assignment and supervision of
personnel.
n
Design and perform audit procedures to respond
to the risk of management override of controls.
n
Determine responses to address the assessed
risks of material misstatement due to fraud.
n
Consider whether an identified misstatement may
be indicative of fraud.
n
Obtain written representations from management
relating to fraud.
n
Communicate with management and those charged
with governance. |
Status