ISA 240: The auditors responsibilities relating to fraud in an audit of financial statements

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Mapa Mental sobre ISA 240: The auditors responsibilities relating to fraud in an audit of financial statements, criado por littlepaz_2001 em 25-08-2013.
littlepaz_2001
Mapa Mental por littlepaz_2001, atualizado more than 1 year ago
littlepaz_2001
Criado por littlepaz_2001 quase 11 anos atrás
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ISA 240: The auditors responsibilities relating to fraud in an audit of financial statements
  1. WHAT IS FRAUD
    1. Is an INTENTIONAL act by one or more individuals among management, those charges with governance, employees or third parties involving the use of DECEPTION to obtain an UNJUST OR ILLEGAL advantage.
      1. Auditor's main concern is with fraud that causes a MATERIAL MISSTATEMENT in financial statements.
        1. FRAUDULENT FINANCIAL REPORTING
          1. Manipulation, falsification or alteration of accounting records/supporting documents
            1. Misrepresentation of events, transactions or other information in the financial statements
              1. Intentional misapplication of accounting principles
          2. MISAPPROPRIATION OF ASSETS
            1. Theft of the entity's assets
        2. ERROR:- caused by a mistake
        3. RESPONSIBILITIES WITH REGARD TO FRAUD
          1. Management and those charged with governance are PRIMARILY responsible for preventing & detecting fraud.
            1. Auditors are responsible for carrying out an audit in accordance with international auditing standards - ISA 240
          2. AUDITOR'S APPROACH TO THE POSSIBILITY OF FRAUD
            1. GENERAL
              1. Key responsibility of the auditor is obtaining reasonable assurance that the financial statements taken as a whole are free from material misstatement whether caused by fraud or error
                1. 1) Identify and assess the risks of material misstatement
                  1. 2) Obtain sufficient appropriate audit evidence through designing and implementing appropriate responses.
                    1. 3) Respond appropriately to fraud or suspected fraud identified during the audit.
                      1. Discussion by members of the engagement team of the susceptibility of the entity's financial statements to material misstatement due to fraud, including how fraud might occur.
              2. RISK ASSESSMENT PROCEDURES
                1. Undertake risk assessment procedures as set out in ISA 315 which would include assessing the risk of fraud
                  1. Inquiries of managemnt, consideration of when fraud risk factors are present, consideration of results of analytical procedures, consideration of any other relevant information
                    1. The size, complexity and ownership characteristics of the entity have a significant influence on the consideration of relevant fraud risk factors.
                      1. Examples of fraud risk factors:-
                        1. Incentives/pressures
                          1. Opportunities
                            1. Attitudes/rationalisations
                        2. Identify fraud risks
                          1. Relates this to what could go wrong at a financial statement level.
                            1. Considers likely magnitude of potential misstatement.
                  2. RESPONDING TO ASSESSED RISKS
                    1. The auditor shall determine overall responses to address the assessed risks of material misstatement due to fraud at the financial statement level.
                      1. Consider the assignment and supervision of personnel
                        1. Consider the accounting policies used by the entity
                          1. Incorporate an element of unpredictability in the selection of the nature,timing and extent of audit procedures.
                            1. The auditor shall design and perform further audit procedures whose nature, timing and extent are responsive to the assessed risks of material misstatement due to fraud at the assertion level.
                        2. EVALUATION OF AUDIT EVIDENCE
                          1. Ensure it is consistent and that it achieves its aim of answering the risks of fraud.
                            1. Analytical procedures and any misstatements found.
                              1. Reliability of written representations.
                          2. REPORTING
                            1. Has identified a fraud or has obtained information that indicates a fraud may exist.
                              1. Shall communicate these matters on a timely basis to the appropriate level of management.
                                1. If the auditor has identified or suspects fraud involving management or employees who have significant internal control
                                  1. Shall communicate these matters to those charged with governance
                                    1. May have a statutory duty to report fraudulent behaviour to REGULATORS outside the entity.
                                2. UNABLE TO CONTINUE
                                  1. Consider the need to withdraw from the engagement if he uncovers EXCEPTIONAL CIRCUMSTANCES with regard to fraud.

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