Document ID: chunk:federal_register_of_legislation:F2023C01124:reg:17:p30
Version: federal_register_of_legislation:F2023C01124
Segment Type: reg
Provision Reference: reg 17 (pt 30/41)
Character Range: 95205–98359

of management's assessments of the controls in place to prevent and detect fraud and of the risk that the financial report may be misstated.

           * A failure by management to appropriately address identified significant deficiencies in internal control, or to appropriately respond to an identified fraud.

           * The auditor's evaluation of the entity's control environment, including questions regarding the competence and integrity of management.

           * Actions by management that may be indicative of fraudulent financial reporting, such as management's selection and application of accounting policies that may be indicative of management's effort to manage earnings in order to deceive financial statement users by influencing their perceptions as to the entity's performance and profitability.

           * Concerns about the adequacy and completeness of the authorisation of transactions that appear to be outside the normal course of business.

Reporting Fraud to an Appropriate Authority outside the Entity (Ref: Para. 44)

A67.         ASA 250[30] provides further guidance with respect to the auditor's determination of whether reporting identified or suspected non‑compliance with laws or regulations to an appropriate authority outside the entity is required or appropriate in the circumstances, including consideration of the auditor's duty of confidentiality.

Aus A67.1 An auditor is required by the Corporations Act 2001 to notify the Australian Securities and Investments Commission (ASIC) if the auditor is aware of certain circumstances.[*]

A68.         The determination required by paragraph 44 may involve complex considerations and professional judgements. Accordingly, the auditor may consider consulting internally (e.g., within the firm or a network firm) or on a confidential basis with a regulator or professional body (unless doing so is prohibited by law or regulation or would breach the duty of confidentiality). The auditor may also consider obtaining legal advice to understand the auditor's options and the professional or legal implications of taking any particular course of action.

Considerations Specific to Public Sector Entities

A69.         In the public sector, requirements for reporting fraud, whether or not discovered through the audit process, may be subject to specific provisions of the audit mandate or related law, regulation or other authority.

Appendix 1

(Ref: Para. A26)

 Examples of Fraud Risk Factors

The fraud risk factors identified in this Appendix are examples of such factors that may be faced by auditors in a broad range of situations.  Separately presented are examples relating to the two types of fraud relevant to the auditor's consideration—that is, fraudulent financial reporting and misappropriation of assets.  For each of these types of fraud, the risk factors are further classified based on the three conditions generally present when material misstatements due to fraud occur: (a) incentives/pressures, (b) opportunities, and (c) attitudes/rationalisations.  Although the risk factors cover a broad range of situations, they are only examples and,