21. Management v Auditor
Report on T&F
Reasonable Assurance Fraud & ERROR
Primary F&E responsibility lies with management
22. Management v Auditor
Report on T&F
Reasonable Assurance Fraud & ERROR
Primary F&E responsibility lies with management
consider the risk of material misstatement
30. Professional Scepticism
Discuss fraud within specific characteristics of
the audit & potential effect on FS
Talk to management about controls to detect or
prevent fraud
31. Professional Scepticism
Discuss fraud within specific characteristics of
the audit & potential effect on FS
Talk to management about controls to detect or
prevent fraud
Obtain evidence that fraud has not occurred or
detected and corrected
39. Fraud/Error is Suspected? Effect on FS?
Extent of misstatement
Additional Document in
Testing? Audit files
40. Fraud/Error is Suspected? Effect on FS?
Extent of misstatement
Additional Document in
Testing? Audit files
41. Fraud/Error is Suspected? Effect on FS?
Extent of misstatement
Effect on Additional Document in
Risk? Testing? Audit files
42. Fraud/Error is Suspected? Effect on FS?
Extent of misstatement
Effect on Additional Document in
Risk? Testing? Audit files
43. Fraud/Error is Suspected? Effect on FS?
Extent of misstatement
Effect on Additional Document in
Risk? Testing? Audit files
Discuss with
Management
44. Fraud/Error is Suspected? Effect on FS?
Extent of misstatement
Effect on Additional Document in
Risk? Testing? Audit files
Discuss with
Management
Tell them to get
legal
advice if fraud is
suspected
45. Fraud/Error is Suspected? Effect on FS?
Extent of misstatement
Effect on Additional Document in
Risk? Testing? Audit files
Discuss with
Management
Tell them to get
legal
advice if fraud is
suspected
46. Fraud/Error is Suspected? Effect on FS?
Extent of misstatement
Effect on Additional Document in
Risk? Testing? Audit files
Discuss with If Management
Management
Tell them to get Suspected?
legal
advice if fraud is
suspected
47. Fraud/Error is Suspected? Effect on FS?
Extent of misstatement
Effect on Additional Document in
Risk? Testing? Audit files
Discuss with If Management
Management
Tell them to get Suspected?
legal Get legal advice or rarely resign
advice if fraud is
suspected
48. Fraud/Error is Suspected? Effect on FS?
Extent of misstatement
Effect on Additional Document in
Risk? Testing? Audit files
Discuss with If Management
Management
Tell them to get Suspected?
legal Get legal advice or rarely resign
advice if fraud is
suspected
49. Fraud/Error is Suspected? Effect on FS?
Extent of misstatement
Effect on Additional Document in
Risk? Testing? Audit files
Consider
Discuss with If Management Report
Management
Tell them to get Suspected? Impact
legal Get legal advice or rarely resign
advice if fraud is
suspected
50. Fraud/Error is Suspected? Effect on FS?
Extent of misstatement
Effect on Additional Document in
Risk? Testing? Audit files
Consider
Discuss with If Management Report
Management
Tell them to get Suspected? Impact
legal Get legal advice or rarely resign
advice if fraud is
suspected
51. Fraud/Error is Suspected? Effect on FS?
Extent of misstatement
Effect on Additional Document in
Risk? Testing? Audit files
Consider
Discuss with If Management Report
Management
Tell them to get Suspected? Impact
legal Get legal advice or rarely resign
advice if fraud is
suspected
Report to
Authorities?
52. Fraud/Error is Suspected? Effect on FS?
Extent of misstatement
Effect on Additional Document in
Risk? Testing? Audit files
Consider
Discuss with If Management Report
Management
Tell them to get Suspected? Impact
legal Get legal advice or rarely resign
advice if fraud is
suspected
Report to
Authorities?
Consider Confidentiality
63. The Auditor - Duty of skill & Care
Depends on the circumstance
64. The Auditor - Duty of skill & Care
Depends on the circumstance
eg. Accepting the word of management after
suspicion is aroused
65. The Auditor - Duty of skill & Care
Depends on the circumstance
eg. Accepting the word of management after
suspicion is aroused
Follow ISAs and show this in working papers
67. The Auditor - Professional competence
Achieve, and maintain, professional knowledge
68. The Auditor - Professional competence
Achieve, and maintain, professional knowledge
eg. Formal & Informal training + experience
69. The Auditor - Professional competence
Achieve, and maintain, professional knowledge
eg. Formal & Informal training + experience
Awareness of general business developments,
such as dropbox and e-commerce
71. The Auditor - Due care
Acting diligently in accordance with technical and
professional standards
72. The Auditor - Due care
Acting diligently in accordance with technical and
professional standards
means applying knowledge minimising the
chance of mistakes
being made
73. The Auditor - Due care
Acting diligently in accordance with technical and
professional standards
means applying knowledge minimising the
chance of mistakes
being made
Enough time to complete work with due care
Staff fully understand the objectives
75. The Auditor - Negligence - A Civil Wrong
Duty of Care
76. The Auditor - Negligence - A Civil Wrong
Duty of Care
Duty is broken
77. The Auditor - Negligence - A Civil Wrong
Duty of Care
Duty is broken
Damage results
78. The Auditor - Negligence - A Civil Wrong
Duty of Care
Duty is broken
Damage results
The auditor does not exist to aid investment decisions,
unless verbal assurances given