IAASB Issues Non-Authoritative Guidance on Fraud in an Audit of Financial Statements

Monday, May 9, 2022

The IAASB has released non-authoritative guidance, The Fraud Lens – Interactions Between ISA 240 and Other ISAs. The guidance illustrates the relationship and linkages between ISA 240, The Auditor’s Responsibilities Relating to Fraud in an Audit of Financial Statements, and other ISAs when planning and performing an audit engagement.

The IAASB is working to revise ISA 240 to enhance or clarify an auditor’s responsibilities on fraud in an audit of financial statements. In the interim, this non-authoritative guidance illustrates how extant ISA 240 is to be applied in conjunction with the full suite of ISAs.

There continues to be concern and debate in relation to the responsibilities of the auditor about fraud in the audit of financial statements including the Parliamentary Joint Committee’s (PJC) report on Regulation of Auditing in Australia containing a recommendation for a review of the sufficiency and effectiveness of reporting requirements under the Australian standards in relation to the prevention and detection of fraud. 

To feed into the discussion, the AUASB, in conjunction with CA ANZ and CPA Australia, held a roundtable in November 2020 to seek views on fraud in the audit of financial statements. This feedback served to inform the AUASB’s submission to the IAASB's Fraud and Going Concern projects.

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