What are the rules regarding an auditor's responsibility to detect fraud? In what situations could the...

What are the rules regarding an auditor's responsibility to detect fraud? In what situations could the auditor be liable?

Solutions

Expert Solution

Rules regarding an auditor's responsibility to detect fraud are: 1. The main responsibility for detecting fraud lies with management and those charged with governance. They need to implement sufficient internal controls that helps management in detecting frauds .

2. Auditor is responsible:

to obtain reasonable assurance that the financial statements are free from material misstatements. (material misstatements can be international misstatements that are called as frauds or they can be unintentional misstatements that are called as errors.)
For obtaining such reasonable assurance, the auditor is liable to maintain professional skepticism ( that is he needs to have an attitude of questioning and being alert to the situations that indicates risk of misstatements).
If auditor identifies risks of fraud or error , then he is responsible to respond appropriately to such risks i.e. he needs to develop an audit plan to assess further.

The responsibility to detect fraud lies with management and auditor can't be held liable for not detecting frauds because audit has certain limitations such as timing, management involved into fraud and others. Auditor is responsible to obtain assurance and not to detect frauds.

ekkarill92 answered 1 month ago

Next > < Previous

Related Solutions

Differentiate between an auditor's ethical responsibility to detect errors, fraud, and illegal acts – What is...

Differentiate between an auditor's ethical responsibility to detect errors, fraud, and illegal acts – What is your ethical responsibility? How are these responsibilities different?

1. What are the auditor's responsibilities regarding fraud? Regarding error? 2. What are accounting estimates? How...

1. What are the auditor's responsibilities regarding fraud? Regarding error? 2. What are accounting estimates? How are accounting estimates audited? 3. What is audit documentation? What are the purposes of audit documentation? 4. Give examples of factors that affect the form and content of audit documentation.

What is the auditor's responsibility for communicating control deficiencies that are severe enough to be considered...

What is the auditor's responsibility for communicating control deficiencies that are severe enough to be considered significant deficiencies or material weaknesses? The auditor responsibility is to report significant deficiencies and material weakness to management and the board of director in writing. Can anyone expound on this matter? Thanks!

What is the auditor's responsibility for communicating control deficiencies that are severe enough to be considered...

What is the auditor's responsibility for communicating control deficiencies that are severe enough to be considered significant deficiencies or material weaknesses?

Identify the internal control procedures classified per (SAS78/COSO) that could prevent or detect this fraud.

1a. What is the auditor's responsibility for obtaining an understanding of internal control? What do you...

1a. What is the auditor's responsibility for obtaining an understanding of internal control? What do you feel some of the best ways are to gain this understanding? How does that responsibility differ for audits of public and nonpublic companies, and how does information technology play a factor in this? 2b. What factors will an auditor likely consider when determining the types and timing of audit procedures?

What is the auditor's responsibility for obtaining an understanding of internal control? What do you feel...

What is the auditor's responsibility for obtaining an understanding of internal control? What do you feel some of the best ways are to gain this understanding? How does that responsibility differ for audits of public and nonpublic companies, and how does information technology play a factor in this?

What are the auditor's challenges when assessing the risk of material misstatement due to fraud?

Discuss and explain the independent auditor's responsibilities to detect and report errors and frauds?

Under Section 404 of the Sarbanes-Oxley Act of 2002, what is the independent auditor's responsibility? The...

Under Section 404 of the Sarbanes-Oxley Act of 2002, what is the independent auditor's responsibility? The independent auditor is required to report on and attest to management's assessment of the effectiveness of the internal controls. The independent auditor is required to establish and maintain an adequate internal control structure and procedures for financial reporting. The independent auditor is required to disclose which member of the audit committee is a financial expert. The independent auditor is required to provide certifications with...

Subjects