Section Engagement Resources (Ref: Para. 23) - Auditing Standard ASA 240 The Auditor's Responsibilities Relating to Fraud in an Audit of a Financial Report (October 2025) - Engagement Resources (Ref: Para. 23) | Zoe
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ASA 220[47] explains that the engagement partner’s determination of whether additional engagement level resources are required to be assigned to the engagement team is a matter of professional judgement and is influenced by the nature and circumstances of the audit engagement, taking into account any changes that may have arisen during the engagement.
The nature, timing, and extent of the involvement of individuals with specialised skills or knowledge, such as forensic and other experts when determined to be necessary or the involvement of more experienced individuals, may vary based on the nature and circumstances of the audit engagement.
Examples: The entity is investigating fraud or suspected fraud that may have a material effect on the financial report (e.g., when it involves senior management). An individual with forensic skills may assist in planning and performing audit procedures as it relates to the specific audit area where the fraud or suspected fraud was identified. The entity is undergoing an investigation by an authority outside the entity for fraud or suspected fraud, or for instances of non-compliance or suspected non-compliance with laws and regulations (e.g., materially misstated tax provision related to tax evasion and materially misstated revenues due to such revenues being generated from illegal activities facilitated through money laundering). Tax and anti-money laundering experts may assist with identifying those fraudulent aspects of the non-compliance or suspected non-compliance that may have a financial report impact. The complexity of the entity’s organisational structure and related party relationships, including the creation or existence of special purpose entities, may present an opportunity for management to misrepresent the financial position or financial performance of the entity. For example, an expert in taxation law may assist in understanding the business purpose and activities or business units within complex organisations, including how its structure for tax purposes may be different from its operating structure. The complexity of the industry or regulatory environment in which the entity operates may present an opportunity or pressure for management to engage in fraudulent financial reporting. For example, an individual specialising in fraud schemes in specific emerging markets may assist in identifying fraud risk factors or where the financial report may be susceptible to risks of material misstatement due to fraud. The use of complex financial instruments or other complex financing arrangements may present an opportunity to inadequately disclose the risks and nature of complex structured products. For example, a valuation expert may assist in understanding the product’s structure, purpose, underlying assets, and market conditions, which may highlight fraud risk factors such as discrepancies between market conditions and the valuation of the structured product.
Forensic skills, in the context of an audit of a financial report, may combine accounting, auditing and investigative skills. Such skills may be applied in an investigation and evaluation of an entity’s accounting records to obtain possible evidence of fraudulent financial reporting or misappropriation of assets, or in performing audit procedures. The use of forensic skills may also assist the auditor in evaluating whether there is management override of controls or intentional management bias in financial reporting.
Examples:Forensic skills may include specialised skills or knowledge in: Identifying and evaluating fraud risk factors. Identifying and assessing the risks of material misstatement due to fraud. Evaluating the effectiveness of controls implemented by management to prevent or detect fraud. Assessing the authenticity of information intended to be used as audit evidence. Gathering, analysing, and evaluating information or data using automated tools and techniques to identify links, patterns, or trends that may be indicative of fraud or suspected fraud. Applying knowledge in fraud schemes, and techniques for interviews, information gathering and data analytics, in the detection of fraud. Interviewing techniques used in discussing sensitive matters with management and those charged with governance. Analysing financial and non-financial information by using automated tools and techniques to look for inconsistencies, unusual patterns, or anomalies that may indicate intentional management bias or that may be the result of management override of controls.
In determining whether the engagement team has the appropriate competence and capabilities, the engagement partner may consider matters such as expertise in IT systems or IT applications used by the entity or automated tools or techniques that are to be used by the engagement team in planning and performing the audit (e.g., when testing a high volume of journal entries and other adjustments when responding to the risks related to management override of controls).
In determining whether the members of the engagement team collectively have the appropriate competence and capabilities to respond to identified risks of material misstatement due to fraud, the engagement partner may consider, for example:
Assigning additional individuals with specialised skills or knowledge, such as forensic and other experts;
Changing the composition of the engagement team to include more experienced individuals; or
Assigning more experienced members of the engagement team to conduct certain audit procedures for those specific audit areas that require significant auditor attention, including to make enquiries of management and, when appropriate in the circumstances, those charged with governance related to those specific audit areas.