1.1. 'After the statutory audit has been completed a fraud has been detected at the office of the auditee'. What is your defence as an auditor?

Detection of fraud after completion of statutory audit :-

• As per SA 240, The primary responsibility for Prevention, Detection and Correction of fraud on Management and Those Charged With Governance.
• It is the duty of Management and TCWG place a strong emphasis on Fraud prevention which may reduce opportunities for fraud to take place.
• Such a system reduces but does not eliminate the possibility of fraud and error.
• An auditor conducting an audit in accordance with SAs is responsible for obtaining reasonable assurance that financial statements taken as a whole are free from material misstatement, whether caused by fraud or error.
• An auditor can obtain only reasonable assurance not an absolute assurance even audit is properly planned and performed in accordance with SAs due to inherent limitation of an audit, (i) Nature of Financial Reporting, (ii) Nature of Audit Procedure, (iii) Balance between Time and Cost, and other factors such as Related Parties etc.
• The risk of not detecting fraud is high rather than error because fraud is properly planned and intentional misstatement and conceal so that auditor facing difficulties to detect the fraud.
• The primary responsibility of auditor is express an opinion on the financial statement that represents true & fair view or not.
• If the auditor can prove with the help of his working paper (documentation) that he has followed adequate procedures necessary for the proper conduct of an audit, he cannot be held responsible for the same. if however, the same cannot be proved, he would be held responsible.

Thanks...:)