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Good day,
The BPP states that auditor is not responsible for detecting and or preventing fraud…is this accurate? As I read on another site that it is the auditors responsibility to detect fraud…please offer some clarity, thank you.
An audit should provide reasonable assurance that material misstatements caused by either fraud or error are detected during the audit. However, there is certainly no obligation on the auditor to find every incident of fraud, and failure to detect fraud (even material ones) does not mean that the auditor has been negligent as is accepted that fraudsters can use clever ways to cover their crimes.
However, as part of their risk assessment auditors should appraise the entity’s susceptibility to fraud and react appropriately. Susceptibility to fraud should also be discussed with he audit team.
An attitude of professional scepticism should mean that, although auditors do no suspect every member of the client’s staff to have committed fraud, they are aware that dishonest people exist and that fraud is sometimes committed. Any irregularities that might indicate fraud should be followed up.
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