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Auditing Standard ASA 240 The Auditor's Responsibilities Relating to Fraud in an Audit of a Financial Report (October 2025)
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This Auditing Standard reproduces substantial parts of the corresponding International Standard on Auditing issued by the International Auditing and Assurance Standards Board (IAASB) and published by the International Federation of Accountants (IFAC), in the manner described in the statement on Conformity with International Standards on Auditing. The AUASB acknowledges that IFAC is the owner of copyright in the International Standard on Auditing incorporated in this Auditing Standard throughout the world.
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ISSN 1030-603X
CONTENTS
PREFACE
AUTHORITY STATEMENT
CONFORMITY WITH INTERNATIONAL STANDARDS ON AUDITING
Ongoing Nature of Communications with Management and Those Charged with Governance.....25
Risk Assessment Procedures and Related Activities.................................26-30
Obtaining an Understanding of the Entity and Its Environment, the Applicable Financial Reporting Framework and the Entity’s System of Internal Control 31-37
Evaluation of Fraud Risk Factors.................................................38
Identifying and Assessing the Risks of Material Misstatement due to Fraud................39-41
Responses to the Assessed Risks of Material Misstatement Due to Fraud..................42-53
Overall Evaluation Based on Audit Procedures Performed...............................54
Fraud or Suspected Fraud....................................................55-58
Auditor Unable to Continue the Audit Engagement....................................59
Ongoing Nature of Communications with Management and Those Charged with GovernanceA44-A48
Risk Assessment Procedures and Related Activities..............................A49-A60
Obtaining an Understanding of the Entity and Its Environment, the Applicable Financial Reporting Framework and the Entity’s System of Internal Control A61-A109
Evaluation of Fraud Risk Factors..........................................A110-A112
Identifying and Assessing the Risks of Material Misstatement due to Fraud...........A113-A125
Responses to the Assessed Risks of Material Misstatement Due to Fraud.............A126-A155
Fraud or Suspected Fraud...............................................A156-A172
Auditor Unable to Continue the Audit Engagement.............................A173-A176
Appendix 2: Examples of Possible Audit Procedures to Address the Assessed Risks of Material Misstatement Due to Fraud
Appendix 3: Examples of Circumstances that May Be Indicative of Fraud or Suspected Fraud
Appendix 4: Additional Considerations that May Inform the Auditor When Selecting Journal Entries and Other Adjustments for Testing
Appendix 5: Other ASAs Addressing Specific Topics that Reference Fraud or Suspected Fraud
preface
Reasons for Issuing ASA 240
The AUASB issues Auditing Standard ASA 240 The Auditor's Responsibilities Relating to Fraud in an Audit of a Financial Report pursuant to the requirements of the legislative provisions and the Strategic Direction explained below.
The AUASB is established under section 227A of the Australian Securities and Investments Commission Act 2001, as amended (ASIC Act). Under section 336 of the Corporations Act 2001, the AUASB may make Auditing Standards for the purposes of the corporations legislation. These Auditing Standards are legislative instruments under the Legislation Act 2003.
Under the Strategic Direction given to the AUASB by the Financial Reporting Council (FRC), the AUASB is required, inter alia, to develop auditing standards that have a clear public interest focus and are of the highest quality.
Main Features
This Auditing Standard represents the Australian equivalent of ISA 240 (Revised 2025), The Auditor’s Responsibilities Relating to Fraud in an Audit of Financial Statements and will replace the current ASA 240 issued by the AUASB in October 2009 (as amended to 27 April 2022).
This Auditing Standard contains differences from the ISA 240 (Revised 2025), which have been made in the Application and Other Explanatory Material and Appendices to reflect Australian regulatory requirements.
AUTHORITY STATEMENT
The Auditing and Assurance Standards Board (AUASB) makes this Auditing Standard ASA 240 The Auditor's Responsibilities Relating to Fraud in an Audit of a Financial Report (October 2025) pursuant to section 227B of the Australian Securities and Investments Commission Act 2001 and section 336 of the Corporations Act 2001.
This Auditing Standard is to be read in conjunction with ASA 101 Preamble to AUASB Standards, which sets out how AUASB Standards are to be understood, interpreted and applied. This Auditing Standard is to be read also in conjunction with ASA 200 Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with Australian Auditing Standards.
Dated: 14 October 2025 D Niven
Chair - AUASB
Conformity with International Standards on Auditing
This Auditing Standard conforms with International Standard on Auditing ISA 240 (Revised 2025), The Auditor’s Responsibilities Relating to Fraud in an Audit of Financial Statements issued by the International Auditing and Assurance Standards Board (IAASB), an independent standard‑setting board of the International Federation of Accountants (IFAC).
Paragraphs that have been added to this Auditing Standard (and do not appear in the text of the equivalent ISA) are identified with the prefix “Aus”.
The following application and other explanatory material is additional to ISA 240:
For an audit engagement under the Corporations Act 2001 (the Act), the possibility of withdrawing from the engagement or resigning from the appointment as an auditor can only be made in accordance with the provisions of the Act, including in certain circumstances, obtaining consent to resign from the Australian Securities and Investments Commission (ASIC). (Ref: Para. Aus A175.1).
Legislation may require the auditor or a member of the audit team to maintain the confidentiality of information disclosed to the auditor, or a member of the audit team, by a person regarding contraventions or possible contraventions of the law. In such circumstances, the auditor or a member of the audit team may be prevented from communicating that information to management or those charged with governance in order to protect the identity of the person who has disclosed confidential information that alleges a breach of the law. In such circumstances, the auditor may consider obtaining legal advice to assist in determining the appropriate course of action and may need to consider the implications for the audit engagement. (Ref: Para. Aus A195.1).
An auditor is required by the Corporations Act 2001 to notify the Australian Securities and Investments Commission (ASIC) if the auditor is aware of certain circumstances. (Ref: Para. Aus A202.1).
This Auditing Standard incorporates terminology and definitions used in Australia.
Compliance with this Auditing Standard enables compliance with ISA 240 (Revised 2025).