Section Auditor’s Report (Ref: Para. 60—62) - Auditing Standard ASA 240 The Auditor's Responsibilities Relating to Fraud in an Audit of a Financial Report (October 2025) - Auditor’s Report (Ref: Para. 60—62)

Auditor’s Report (Ref: Para. 60—62)Auditor’s Report (Ref: Para. 60—62)

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Auditor’s Report (Ref: Para. 60–62)

Determining Key Audit Matters Related to Fraud

Users of the financial report are interested in matters related to fraud about which the auditor had a robust dialogue with those charged with governance. The considerations in paragraph 60 focus on the nature of matters communicated with those charged with governance that are intended to reflect matters related to fraud that may be of particular interest to intended users.
In addition to matters that relate to the specific required considerations in paragraph 60, there may be other matters related to fraud communicated with those charged with governance that required significant auditor attention and that therefore may be determined to be key audit matters in accordance with paragraph 61.
Matters related to fraud are often matters that require significant auditor attention. For example, the identification of fraud or suspected fraud may require significant changes to the auditor’s risk assessment and re-evaluation of the planned audit procedures (i.e., a significant change in the audit approach).
The determination of key audit matters involves making a judgement about the relative importance of matters that required significant auditor attention. Therefore, it may be rare that the auditor of a complete set of general-purpose financial report of a publicly traded entity would not determine at least one key audit matter related to fraud. However, in certain limited circumstances, the auditor may determine that there are no matters related to fraud that are key audit matters in accordance with paragraph 61.
Accounting estimates are often the most complex areas of the financial report because they may be dependent on significant management judgement. Significant auditor attention may be required in accordance with paragraph 60(a) to respond to assessed risks of material misstatement due to fraud associated with an accounting estimate that involves significant management judgement. Significant management judgement is often involved when an accounting estimate is subject to a high degree of estimation uncertainty and subjectivity.

Example:The auditor determines significant auditor attention was required to respond to the risk of material misstatement due to fraud associated with the entity’s estimate of expected credit losses. Management utilises a model that requires a complex set of assumptions about future developments in a variety of entity-specific scenarios that are difficult to predict. Based on the auditor’s identification of aggressive profitability expectations of investment analysts about the entity, the auditor identified a risk of material misstatement due to fraud because of the subjectivity involved in the expected credit losses estimate and the incentive this creates for intentional management bias.