Responding to Suspected Fraud or Illegal Acts
Required Auditor Actions
When auditors identify information suggesting fraud or illegal acts, they perform additional procedures to determine whether a material misstatement exists and communicate findings to the appropriate parties.
- Gather additional audit evidence.
- Discuss findings with appropriate management.
- Communicate significant matters to those charged with governance.
- Consider the effect on the audit opinion.
- Obtain legal advice when necessary.
Tip
If senior management is involved, auditors communicate directly with those charged with governance rather than management.
Summary
Suspected fraud requires expanded audit procedures and appropriate communication.