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  • Summary of SA 240 - The Auditor's Responsibility Relating To Fraud in An Audit of Financial Statements

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    This document summarizes SA 240, which deals with an auditor's responsibility relating to fraud in an audit of financial statements. It distinguishes between fraud and error, noting that fraud is intentional while error is unintentional. The objective of SA 240 is to identify and assess risks of material misstatements due to fraud and to obtain sufficient evidence to respond appropriately to such risks. While management has the primary responsibility to prevent and detect fraud, the auditor is responsible for obtaining reasonable assurance that financial statements are free of material misstatement, maintaining professional skepticism, and communicating with those charged with governance.

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    Summary of SA 240 - The Auditor’s Responsibility Relating to fraud in an Audit of Financial Statements - TaxDose.com

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    This document summarizes SA 240, which deals with an auditor's responsibility relating to fraud in an audit of financial statements. It distinguishes between fraud and error, noting that fraud is intentional while error is unintentional. The objective of SA 240 is to identify and assess risks of material misstatements due to fraud and to obtain sufficient evidence to respond appropriately to such risks. While management has the primary responsibility to prevent and detect fraud, the auditor is responsible for obtaining reasonable assurance that financial statements are free of material misstatement, maintaining professional skepticism, and communicating with those charged with governance.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    25 views1 page

    Summary of SA 240 - The Auditor's Responsibility Relating To Fraud in An Audit of Financial Statements

    Uploaded by

    gbcadmin
    This document summarizes SA 240, which deals with an auditor's responsibility relating to fraud in an audit of financial statements. It distinguishes between fraud and error, noting that fraud is intentional while error is unintentional. The objective of SA 240 is to identify and assess risks of material misstatements due to fraud and to obtain sufficient evidence to respond appropriately to such risks. While management has the primary responsibility to prevent and detect fraud, the auditor is responsible for obtaining reasonable assurance that financial statements are free of material misstatement, maintaining professional skepticism, and communicating with those charged with governance.

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    © All Rights Reserved
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    Flag for inappropriate content
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    8/2/2021 Summary of SA 240 - The Auditor’s Responsibility Relating to fraud in an Audit of Financial Statements - TaxDose.

    com

    1. Summary of SA 240

    The Auditor’s Responsibility Relating to fraud in an Audit of Financial Statements

    Fraud V/s Error v Fraud is an intentional act by any person within the entity while an error represents unintentional act resulting into
    misstatements of the financial statements.

    v Fraud or Error may be material or immaterial.

    Example of Frauds
    Misappropriation of Assets Theft of Assets

    Fraudulent Financial Reporting Intentional omission of amounts/ disclosures.

    Reason for this SA This SA deals with:-

    v Auditor’s responsibility relating to fraud in audit of financial statements; &

    v How SA 315 & 330 is to be applied in relation to risks of material misstatements due to fraud.

    Objective of this SA v Identify & Assess the Risks of Material Misstatements due to fraud (SA 315);

    v Obtain Sufficient & appropriate Audit evidence about assessed risks (SA 500-599);

    v Respond appropriately to assessed risks (SA 330)

    Primary The primary responsibility to prevent, detect or correct error or fraud on timely basis is ofManagement.
    Responsibility
    y/gst/)
    Auditor’s To obtain reasonable assurance that the financial statements are free from material misstatements.
    Responsibility
    egory/income-
    Auditor’s Duty v To maintain professional skepticism during the audit.

    v Discussion amongst the engagement team members

    v Risk Assessment Procedures ( SA 315)


    egory/company-
    v Response to the assessed risks ( SA 330)

    v Evaluation of evidences obtained

    v Communication to TCWG ( SA 260)


    egory/gst)
    v Audit Documentation

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