Document ID: chunk:federal_register_of_legislation:F2023C01124:reg:17:p4
Version: federal_register_of_legislation:F2023C01124
Segment Type: reg
Provision Reference: reg 17 (pt 4/41)
Character Range: 20352–23730

the relative size of individual amounts manipulated, and the seniority of those individuals involved.  While the auditor may be able to identify potential opportunities for fraud to be perpetrated, it is difficult for the auditor to determine whether misstatements in judgement areas such as accounting estimates are caused by fraud or error.

7.                   Furthermore, the risk of the auditor not detecting a material misstatement resulting from management fraud is greater than for employee fraud, because management is frequently in a position to directly or indirectly manipulate accounting records, present fraudulent financial information or override controls designed to prevent similar frauds by other employees.

8.                   When obtaining reasonable assurance, the auditor is responsible for maintaining professional scepticism throughout the audit, considering the potential for management override of controls and recognising the fact that audit procedures that are effective for detecting error may not be effective in detecting fraud.  The requirements in this Auditing Standard are designed to assist the auditor in identifying and assessing the risks of material misstatement due to fraud and in designing procedures to detect such misstatement.

9.                   The auditor may have additional responsibilities under law, regulation or relevant ethical requirements regarding an entity's non‑compliance with laws and regulations, including fraud, which may differ from or go beyond this and other Australian Auditing Standards, such as: (Ref: Para. A6)

(a)                Responding to identified or suspected non‑compliance with laws and regulations, including requirements in relation to specific communications with management and those charged with governance, assessing the appropriateness of their response to non‑compliance and determining whether further action is needed;

(b)                Communicating identified or suspected non‑compliance with laws and regulations to other auditors (e.g., in an audit of a group financial report); and

(c)                Documentation requirements regarding identified or suspected non‑compliance with laws and regulations.

    Complying with any additional responsibilities may provide further information that is relevant to the auditor's work in accordance with this and other Australian Auditing Standards (e.g., regarding the integrity of management or, where appropriate, those charged with governance).

Effective Date

10.               [Deleted by the AUASB.  Refer Aus 0.3]

Objectives

11.               The objectives of the auditor are:

(a)                To identify and assess the risks of material misstatement of the financial report due to fraud;

(b)                To obtain sufficient appropriate audit evidence regarding the assessed risks of material misstatement due to fraud, through designing and implementing appropriate responses; and

(c)                To respond appropriately to fraud or suspected fraud identified during the audit.

Definitions

12.               For the purposes of this Auditing Standard, the following terms have the meanings attributed below:

(a)                Fraud means an intentional act by one or more individuals among management, those charged with governance, employees, or third parties, involving the use of deception to