ISA 240 – The Auditor’s Responsibilities Relating to Fraud in an Audit of Financial Statements

Part 1: Introduction + Executive summary
Part 2: It’s all about expectations, What is fraud in audit?
Part 3: Responsibility towards fraud, ISA 240 Objectives
Part 4: Assessing risk of fraud
Part 5: Responses to assessed risk, Evaluation of evidence obtained

Part 6: Auditor’s inability to continue engagement, Written representation

Part 7: Communication with those charged with governance, Communication to regulatory authorities, Documenting fraud

Read Online  ISA 240 Test

8 Auditor’s inability to continue engagement

If auditor is unable to continue working on engagement as a result of fraud, actual or suspected, auditor shall:

Determine responsibilities imposed by law and profession including communicating the matter with those who appointed auditor and regulatory authorities.

If appropriate and permitted by applicable laws, decide whether to withdraw from engagement

If auditor withdraws then discuss withdrawal and reasons of withdrawal with:

  1. Management and those charged with governance
  2. those who appointed auditor after determining professional legal responsibilities for such

9 Written Representation

Auditor shall obtain written representation from management that it is the responsibility of management to design and implement internal control system capable of preventing and detecting fraud.

Written representations hall contain a disclosure by management that they have disclosed:

  1. Management’s assessment that financial statements may be materially misstated due to fraud
  2. Any actual or suspected fraud in their knowledge involving employee, management or third party.
  3. Any actual or suspected fraud or allegations of the same affecting financial statements as brought to attention by employee, analysts, regulators or others