What the revised fraud standard changes about your audit
What the revised fraud standard changes about your audit
Fraud responsibilities in an audit have always been misunderstood. Management and those charged with governance are responsible for preventing and detecting fraud. The auditor is responsible for obtaining reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. The revised standard on the auditor's responsibilities relating to fraud sharpens what that means in practice.
For companies, the visible effects are in the audit itself. Expect more robust risk assessment discussion, more challenge of management's explanations rather than acceptance of them, more attention to the controls that address fraud risk, and more documented professional scepticism. Journal entry testing becomes more targeted. Communication with those charged with governance becomes more explicit. None of this implies suspicion of your team, but it does mean your controls and your explanations will be tested more visibly than before.
The best preparation is an honest look at your own fraud risk before the auditor looks at it: segregation of duties, approval limits that are actually enforced, and a channel for people to raise concerns. BDO Azerbaijan offers fraud risk assessments and forensic support alongside audit. Contact us for a fraud risk review.
For companies, the visible effects are in the audit itself. Expect more robust risk assessment discussion, more challenge of management's explanations rather than acceptance of them, more attention to the controls that address fraud risk, and more documented professional scepticism. Journal entry testing becomes more targeted. Communication with those charged with governance becomes more explicit. None of this implies suspicion of your team, but it does mean your controls and your explanations will be tested more visibly than before.
The best preparation is an honest look at your own fraud risk before the auditor looks at it: segregation of duties, approval limits that are actually enforced, and a channel for people to raise concerns. BDO Azerbaijan offers fraud risk assessments and forensic support alongside audit. Contact us for a fraud risk review.