Name: Sorin ben

ID#: 2904375

Auditing Assignment(reflection paper)

Auditor’s responsibility towards fraud in financial statement.

Fraud is a false representation of facts, whether by intentionally withholding information or by providing
false statements to another person for a specific purpose. Doing the things by knowing that it is wrong. It
can be done by intentionally withholding information or by providing another person’s false statements.
However, auditors are responsible to plan and perform the audit to obtain sensible declaration about
whether the financial statements are free from materials misstatement caused by an error or fraud and
to issue their reports with an opinion to ensures the true and fair view on presentation of the financial
statements by detecting the errors and fraud in a material misstatement. If it was caused then
communicate these matters to the appropriate level of management to solve it.

Objectives
Auditor’s objectives towards fraud in financial statements is to obtain the sensible declaration about
whether the whole financial statements are free from materials misstatements which is due to fraud or
error and issue an auditor with their opinions. They identify the fraud risks to the organization for both
external and internal fraud analyze those risks, and develop an action plan for justification or controlling
those risks. However, auditor’s primary objectives are to detect the errors and fraud and ensures the
true and fair view on computation of presentation of final statements. As are auditor they have to speak
honestly and report those issues. Although, auditor will be assessing the risk of fraud, designing audit
procedures to detect it and evaluating evidence gathered during audit.

Firstly, plan and perform the audit to obtain judicious assurance whether financial statements are free
from material misstatement or caused by error or fraud, meaning as a auditor they are responsible to
plan, perform and check through the financial statements and identify where the mistakes happen and
in what way whether it is caused by an error or fraud, and then consider whether such misstatements
may be indicative fraud or not and if it was indicative fraud than report those matters to the suitable
level of management such as board of director and shareholders to solve it out so that next time it will
not appearing again.

Secondly, ensures the true and fair view on computation of presentation of financial statements
meaning, provide the accurate and dependable information about a company’s financial performance
and position. It means that statements which Include income statements, balance sheets, and cash flow
statements should fairly represent the financial reality of the business. However, they are there to
identify any materials misstatements whether it is caused by fraud or error and try to solved it by
speaking the truth and reporting those matters to the suitable level of management.
Thirdly, identify the fraud risks to the organization both external and internal refers to evaluate and
recognize potential activities that could affect a company by both internal and external. For external
fraud risks such as dishonest actions carried out by an individual employee in an organization can caused
a fraud in the company. So, in order to avoid this, they have to increase transparency and report the
mistakes to the appropriate level of managements.

To conclude, fraud is the false demonstrative of facts and which is done with an intentionally. Doing the
mistakes by knowing that it is wrong. However, it can be intentionally withholding information or by
providing false statements by another person. Although, relate to this mistake auditors are responsible
to obtain sensible declaration about whether financial statements are whole free from any materials
misstatement due to error or fraud to issue with auditor’s opinion and identify in which way the mistake
was taken. However, identify the fraud risks to organization by both internal and external fraud analyze
those risks and develop action plan for justifying or controlling those risks. If there are any material
misstatements than try to solve it by communicate those matters to the proper level of management
such as Board of director and shareholder and report it directly to audit committee and suggest the
client. At the end auditor’s primarily aim is to detect the errors and fraud and ensures the true and fair
views on computation of presentation of the financial statements with a reality position of a company.
Auditors will provide recommendations for implementing stronger financial controls, ethical culture,
whistleblower mechanism and increasing shots for improving internal controls to prevent future
instances of fraud.

References are:

www.frc.org.uk

www.auditboard.com

www.journalofaccountancy.com