Responsibilities of the Auditor, Management and Those Charged with Governance
Responsibilities of the Auditor
- The auditor’s responsibilities relating to fraud when conducting an audit in accordance with this ASA, and other relevant ASAs, are to: (Ref: Para. A1)
- Plan and perform the audit to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement due to fraud. These responsibilities include identifying and assessing risks of material misstatement in the financial report due to fraud and designing and implementing responses to address those assessed risks.
- Communicate and report about matters related to fraud.
Responsibilities of Management and Those Charged with Governance
- The primary responsibility for the prevention and detection of fraud rests with both management and those charged with governance of the entity. It is important that management, with the oversight of those charged with governance, place a strong emphasis on fraud prevention, which may reduce opportunities for fraud to take place, and fraud deterrence, which could persuade individuals not to commit fraud because of the likelihood of detection and punishment. This involves a commitment to creating and maintaining a culture of honesty and ethical behaviour that can be reinforced by active oversight by those charged with governance. Oversight by those charged with governance includes considering the potential for override of controls or other inappropriate influence over the financial reporting process, such as efforts by management to manipulate earnings in order to influence the perceptions of financial report users regarding the entity’s performance.