Section Evaluation of Audit Evidence (Ref: Para. - ASA 240 - The Auditor’s Responsibilities Relating to Fraud in an Audit of a Financial Report - October 2009 - Evaluation of Audit Evidence (Ref: Para. A50) | Zoe
ASA 240 - The Auditor’s Responsibilities Relating to Fraud in an Audit of a Financial Report - October 2009
Evaluation of Audit Evidence (Ref: Para.Evaluation of Audit Evidence (Ref: Para. A50)
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The auditor shall evaluate whether analytical procedures that are performed near the end of the audit, when forming an overall conclusion as to whether the financial report is consistent with the auditor’s understanding of the entity, indicate a previously unrecognised risk of material misstatement due to fraud. (Ref: Para. A51)
If the auditor identifies a misstatement, the auditor shall evaluate whether such a misstatement is indicative of fraud. If there is such an indication, the auditor shall evaluate the implications of the misstatement in relation to other aspects of the audit, particularly the reliability of management representations, recognising that an instance of fraud is unlikely to be an isolated occurrence. (Ref: Para. A52)
If the auditor identifies a misstatement, whether material or not, and the auditor has reason to believe that it is or may be the result of fraud and that management (in particular, senior management) is involved, the auditor shall re‑evaluate the assessment of the risks of material misstatement due to fraud and its resulting impact on the nature, timing and extent of audit procedures to respond to the assessed risks. The auditor shall also consider whether circumstances or conditions indicate possible collusion involving employees, management or third parties when reconsidering the reliability of evidence previously obtained. (Ref: Para. A53)
If the auditor confirms that, or is unable to conclude whether, the financial report is materially misstated as a result of fraud the auditor shall evaluate the implications for the audit. (Ref: Para. A54)