Asa240

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ASA 240
(April 2006)

Auditing Standard ASA 240
The Auditor's Responsibility to
Consider Fraud in an Audit of
a Financial Report
Issued by the Auditing and Assurance Standards Board

Obtaining a Copy of this Auditing Standard
This Auditing Standard is available on the AUASB website:
www.auasb.gov.au.
Alternatively, printed copies of this Auditing Standard are available b y contacting:
Auditing and Assurance Standards Board
Level 4
530 Collins Street
Melbourne Victoria 3000
AUSTRALIA

Phone: (03) 8080 7400
Fax:
(03) 8080 7450
E-mail: enquiries@auasb.gov.au
Postal Address:
PO Box 204
Collins Street West
Melbourne Victoria 8007
AUSTRALIA

COPYRIGHT
© Commonwealth of Australia 2006. The text, graphics and layout of this Auditing Standard are protected by Australian copyright law and the comparable law of other countries. Reproduction within Australia in unaltered form (retaining this notice) is permitted for personal and non commercial use subject to the inclusion of an acknowledgment of the source. Requests and enquiries concerning reproduction and rights for commercial purposes within Australia should be addressed to the Principal Executive, Auditing and Assurance Standards Board, PO Box 204, Collins Street West, Melbourne Victoria 8007. Otherwise, no part of the Auditing Standard may be reproduced, stored or transmitted in any form or by any means without the prior written permission of the AUASB except as permitted by law. ISSN 1833-4393

ASA 240

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AUDITING STANDARD

Auditing Standard ASA 240 The Auditor's Responsibility to Consider Fraud in an Audit of a Financial Report

CONTENTS
PREFACE
AUTHORITY STATEMENT
Paragraphs
Application...............................................................................

1-2

Operative Date .........................................................................

3

Introduction ..............................................................................

4-6

Characteristics of Fraud .........................................................

7-15

Responsibilities of Those Charged With Governance and of
Management ..........................................................................

16-19

Inherent Limitations of an Audit in the Context of Fraud ........

20-23

Responsibilities of the Auditor for Detecting Material
Misstatement Due to Fraud ...................................................

24-25

Professional Scepticism ...........................................................

26-29

Discussion Among the Engagement Team ..............................

30-36

Risk Assessment Procedures ....................................................

37

Enquiries and Obtaining an Understanding of Oversight
Exercised by Those Charged With Governance ....................

38-51

Consideration of Fraud Risk Factors ......................................

52-56

Consideration of Unusual or Unexpected Relationships .........

57-58

Consideration of Other Information ........................................

59-60

Identification and Assessment of the Risks of Material
Misstatement Due to Fraud ...................................................

61-63

Risks of Fraud in Revenue Recognition ................................

64

Responses to the Risks of Material Misstatement Due to Fraud

65-69

Overall Responses .................................................................

70-73

Audit Procedures Responsive to Risks of Material
Misstatement Due to Fraud at the Assertion Level ...............

74-77

Audit Procedures Responsive to Management Override of
Controls.................................................................................

78-80

Journal Entries and Other Adjustments ...................................

81-83

ASA 240

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AUDITING STANDARD

Auditing Standard ASA 240 The Auditor's Responsibility to Consider Fraud...
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