Fraud or Suspected Fraud (Ref: Para. A7—Fraud or Suspected Fraud (Ref: Para. A7—A11, A28 and A156—A172)

Fraud or Suspected Fraud (Ref: Para. A7–A11, A28 and A156–A172)

1. If the auditor identifies fraud or suspected fraud, the auditor shall obtain an understanding of the matter(s) in order to determine the effect on the audit engagement. In doing so, the auditor shall: (Ref: Para.A158–A162)
   1. Make enquiries about the matter(s) with the appropriate level of management and, when appropriate in the circumstances, make enquiries about the matter(s) with those charged with governance;
   2. If the entity has a process to investigate the matter(s), evaluate whether it is appropriate in the circumstances; and
   3. If the entity has implemented remedial actions to respond to the matter(s), evaluate whether they are appropriate in the circumstances.
2. Except for fraud or suspected fraud determined by the auditor to be clearly inconsequential based on the procedures performed in paragraph 55, the engagement partner shall: (Ref: Para. A163–A165)
   1. Determine whether:
      1. To perform additional risk assessment procedures to provide an appropriate basis for the identification and assessment of the risks of material misstatement due to fraud in accordance with ASA 315;
      2. To design and perform further audit procedures to appropriately respond to the risks of material misstatement due to fraud in accordance with ASA 330; and
      3. There are additional responsibilities for the auditor under law, regulation or relevant ethical requirements about the entity’s non-compliance with laws or regulations in accordance with ASA 250.
   2. If applicable, consider the impact on prior period audits.
3. If the auditor identifies a misstatement due to fraud, the auditor shall: (Ref: Para. A166–A172)
   1. Determine whether the identified misstatement is material by considering the nature of the qualitative or quantitative circumstances giving rise to the misstatement;
   2. Determine whether control deficiencies exist, including significant deficiencies in internal control related to the prevention or detection of fraud, relating to the identified fraud or suspected fraud;
   3. Determine the implications of the misstatement in relation to other aspects of the audit, including when the auditor has reason to believe that management is involved; and
   4. Reconsider the reliability of management’s representations and audit evidence previously obtained, including when the circumstances or conditions giving rise to the misstatement indicate possible collusion involving employees, management or third parties.
4. If the auditor determines that the financial report is materially misstated due to fraud or the auditor is unable to obtain sufficient appropriate audit evidence to enable the auditor to conclude whether the financial report is materially misstated due to fraud, the auditor shall: