ASA 240 - The Auditor’s Responsibility to Consider Fraud in an Audit of a Financial Report - April 2006
Responsibilities of the Auditor for DeteResponsibilities of the Auditor for Detecting Material Misstatement Due to Fraud
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Responsibilities of the Auditor for Detecting Material Misstatement Due to Fraud
24 Under ASA 200, an auditor conducting an audit in accordance with Auditing Standards needs to obtain reasonable assurance that the financial report taken as a whole is free from material misstatement, whether caused by fraud or error. An auditor cannot obtain absolute assurance that material misstatements in the financial report will be detected because of such factors as the use of judgement, the use of testing, the inherent limitations of internal control and the fact that much of the audit evidence available to the auditor is persuasive rather than conclusive in nature.
25 When obtaining reasonable assurance, an auditor:
- in accordance with paragraph 27 of this Auditing Standard, is required to maintain an attitude of professional scepticism throughout the audit;
- under paragraph 80 of this Auditing Standard, needs to consider the potential for management override of controls; and
- ordinarily recognises the fact that audit procedures that are effective for detecting error may not be appropriate in the context of an identified risk of material misstatement due to fraud.
The remainder of this Auditing Standard provides additional guidance on considering the risks of fraud in an audit and designing procedures to detect material misstatements due to fraud.