In short
When an auditor finds evidence that fraud may exist, it is brought to the attention of an appropriate level of management, at least one level above those involved. Fraud involving senior management, or causing a material misstatement, is reported to those charged with governance.
Key takeaways
- Even inconsequential fraud should be brought to management's attention.
- Reporting outside the entity is generally barred by confidentiality, except to comply with law, respond to a successor auditor or a subpoena, or meet government audit requirements.
- The auditor considers whether to withdraw from the engagement.
Where it's tested
AUD: Fraud Risk — study notes, a five-minute revision sheet and practice questions.
Practise: 3 questions
Question 1 of 3 · 0 answered
Which fraud-related presumption can NEVER be rebutted by the auditor?