CONTENTS

PREFACE

AUTHORITY STATEMENT

Paragraphs

Application.................................. 1-2

Operative Date................................ 3

Introduction.................................. 4-6

Characteristics of Fraud ......................... 7-15

Responsibilities of Those Charged With Governance and of Management 16-19

Inherent Limitations of an Audit in the Context of Fraud.... 20-23

Responsibilities of the Auditor for Detecting Material Misstatement Due to Fraud 24-25

Professional Scepticism.......................... 26-29

Discussion Among the Engagement Team.............. 30-36

Risk Assessment Procedures....................... 37

Enquiries and Obtaining an Understanding of Oversight Exercised by Those Charged With Governance 38-51

Consideration of Fraud Risk Factors................. 52-56

Consideration of Unusual or Unexpected Relationships..... 57-58

Consideration of Other Information.................. 59-60

Identification and Assessment of the Risks of Material Misstatement Due to Fraud 61-63

Risks of Fraud in Revenue Recognition................ 64

Responses to the Risks of Material Misstatement Due to Fraud 65-69

Overall Responses............................. 70-73

Audit Procedures Responsive to Risks of Material Misstatement Due to Fraud at the Assertion Level 74-77

Audit Procedures Responsive to Management Override of Controls 78-80

Journal Entries and Other Adjustments................ 81-83

Accounting Estimates........................... 84-85

Business Rationale for Significant Transactions.......... 86

Evaluation of Audit Evidence...................... 87-95

Management Representations...................... 96-98

Communications With Management and Those Charged With Governance 99-109

Communications to Regulatory and Enforcement Authorities. 110

Auditor Unable to Continue the Engagement............ 111-115

Documentation................................ 116-120

Conformity with International Standards on Auditing...... 121

Appendix 1: Examples of Fraud Risk Factors

Appendix 2: Examples of Possible Audit Procedures to Address the Assessed Risks of Material Misstatement Due to Fraud

Appendix 3: Examples of Circumstances that may Indicate the Possibility of Fraud