Document ID: chunk:federal_register_of_legislation:F2023C01124:reg:17:p5
Version: federal_register_of_legislation:F2023C01124
Segment Type: reg
Provision Reference: reg 17 (pt 5/41)
Character Range: 23449–26627

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 obtain an unjust or illegal advantage.

(b)                Fraud risk factors means events or conditions that indicate an incentive or pressure to commit fraud or provide an opportunity to commit fraud.

Requirements

Professional Scepticism

13.               In accordance with ASA 200[5], the auditor shall maintain professional scepticism throughout the audit, recognising the possibility that a material misstatement due to fraud could exist, notwithstanding the auditor's past experience of the honesty and integrity of the entity's management and those charged with governance.  (Ref: Para. A8‑A9)

14.               Unless the auditor has reason to believe the contrary, the auditor may accept records and documents as genuine.  If conditions identified during the audit cause the auditor to believe that a document may not be authentic or that terms in a document have been modified but not disclosed to the auditor, the auditor shall investigate further.  (Ref: Para. A10)

15.               Where responses to enquiries of management or those charged with governance are inconsistent, the auditor shall investigate the inconsistencies.

Discussion among the Engagement Team

16.               ASA 315 requires a discussion among the engagement team members and a determination by the engagement partner of which matters are to be communicated to those team members not involved in the discussion[6].  This discussion shall place particular emphasis on how and where the entity's financial report may be susceptible to material misstatement due to fraud, including how fraud might occur.  The discussion shall occur setting aside beliefs that the engagement team members may have that management and those charged with governance are honest and have integrity.  (Ref: Para. A11‑A12)

Risk Assessment Procedures and Related Activities

17.               When performing risk assessment procedures and related activities to obtain an understanding of the entity and its environment, the applicable financial reporting framework and the entity's system of internal control, required by ASA 315, the auditor shall perform the procedures in paragraphs 18‑25 of this Auditing Standard to obtain information for use in identifying the risks of material misstatement due to fraud.

Management and Others within the Entity

18.               The auditor shall make enquiries of management regarding:

         (a)                Management's assessment of the risk that the financial report may be materially misstated due to fraud, including the nature, extent and frequency of such assessments;  (Ref: Para. A13‑A14)

         (b)                Management's process for identifying and responding to the risks of fraud in the entity, including any specific risks of fraud that management has identified or that have been brought to its attention, or classes of transactions, account balances,