AUASB Consultation on IAASB exposure draft – revised ISA 240 on Fraud

Wednesday, February 21, 2024

The AUASB has released a Consultation Paper seeking public comment on the IAASB’s Exposure Draft on Proposed ISA 240 (Revised) The Auditor’s Responsibilities Relating to Fraud in an Audit of Financial Statements; and Proposed Conforming and Consequential Amendments to Other ISAs (ED ISA 240).

The objectives of the proposed revisions to ISA 240 include:

• Clarify the role and responsibilities of the auditor for fraud in an audit of financial statements;
• Promote consistent behaviour and effective responses to identified risks of material misstatement due to fraud through enhanced requirements and application material;
• Reinforce the importance, throughout the audit, of the appropriate exercise of professional scepticism in fraud-related audit procedures; and
• Enhance transparency on fraud-related procedures and strengthen communications with those charged with governance.

Proposed enhancements include:

• Applying a fraud lens during the auditor’s risk assessment;
• Assessing risk and audit procedures when fraud or suspected fraud is identified;
• Transparency in Key Audit Matters (KAMs) in the auditor’s report related to fraud;
• Enhanced requirements on audit documentation;
• Considering the use of technology by audited entities and in the audit; and
• Fraud represents a non-compliance with laws and regulations.

The AUASB invites stakeholders to comment on all or some of the questions contained in the AUASB Consultation Paper by 21 May 2024 via the AUASB website. Where stakeholders provide comments directly to the IAASB, the AUASB request a copy is provided to us. Stakeholders’ feedback will be used to inform the AUASB in its formal response to the IAASB on the IAASB Exposure Draft.

The AUASB will hold outreach activities on this topic in the near future, watch this space for more details. Any queries about the Consultation Paper and the AUASB’s associated outreach activities should be directed to Rene Herman, AUASB Deputy Technical Director, at [email protected].