International standard setters also want auditors to explicitly say when they agree with management’s assessment that their company is a ‘going concern’.
Already a subscriber?International standard setters want to “nudge” auditors to apply more “professional scepticism” to potential fraud when they are checking the accounts of clients and to explicitly state their fraud-related findings in the financial report.
Australian corporate regulator reconfigured its audit inspection program and stopped publishing the individual results of the top six audit firms“It’s like refocusing attention on the auditor’s role in relation to fraud, and then also helping to nudge them,” said IAASB chairman Tom Seidenstein during a recent visit to Australia at the start of the month. He said the goal was to remind auditors they should take more action when they suspect fraud during an audit.
One “helpful nudge” could include changing the “work effort verb from ‘evaluate’ to ‘determine’” when examining the types of revenue and revenue transactions known to be at risk of material misstatement due to fraud. “The real issue is when there close calls. When it’s for listed entities, we’re going to mandate that the auditor also include a description of how the auditor evaluated the management’s assessment of the entity’s ability to continue as a ‘going concern’.”
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