Responsibilities of management and the auditor

In this lesson

1. 0:00 Management and auditor fraud responsibilities
2. 0:34 How management prevents and detects fraud
3. 1:17 Auditor's role in detecting material misstatement
4. 2:04 Considering fraud risk throughout the audit
5. 3:05 Discussing fraud assessment with management

About this lesson

Your role as an auditor is different: you focus on detecting material misstatements resulting from fraud or error, and must maintain professional scepticism throughout the audit process, particularly during planning and your discussions with those charged with governance. You'll explore how fraud risk is assessed at different audit stages, starting with your planning meeting where the audit team considers the client's susceptibility to fraud based on factors like business type and control environment. The lesson covers how to engage with management about their fraud risk assessment, examine the internal controls in place to prevent and respond to fraud, and determine whether to involve internal audit in your procedures. Understanding these boundaries and responsibilities ensures you approach fraud detection systematically and with appropriate professional scepticism, while recognising that even immaterial errors or fraud should be reported to the audit committee.

Duration: 4m