SOCPA Presents Its Views on ISA 240 Update

The International Auditing and Assurance Standards Board (IAASB) has published an Exposure Draft to update International Standard on Auditing 240, "The Auditor's Responsibilities Relating to Fraud in an Audit of Financial Statements." The update aims to clarify the auditor's role and responsibilities regarding fraud in financial statement audits by enhancing the standard's content to emphasize the appropriate level of professional skepticism during audit procedures related to misstatement risks due to fraud, and improving transparency regarding audit procedures concerning fraud-related misstatements in financial statements.

  

SOCPA, represented by its Auditing Standards Board, has principally welcomed IAASB's efforts to update ISA 240. Simultaneously, SOCPA drew IAASB's attention to several concerns regarding the proposed updates, including unintended consequences of expansion in clarifying the auditor's role and responsibilities regarding fraud, which could lead to misconceptions affecting stakeholder perceptions. SOCPA also emphasized the importance of consistency in promoting professional skepticism and the significance of legal and behavioral parameters regarding the auditor's role and responsibilities concerning fraud risks, including transparency and disclosure requirements about fraud-related audit procedures in the audit report.

 

SOCPA's detailed views can be accessed here.