Non-authoritative guidance on Fraud in an Audit of Financial Statements


On 5 May 2022 the IAASB published non-authoritative guidance called “The Fraud Lens – Interactions Between ISA 240 and Other ISAs”.


ISA 240 both expands on certain ISAs as well as provides fraud-specific audit procedures that complement the other ISAs. In doing so, ISA 240 broadly focuses on the auditor’s fraud lens when planning and performing an audit of financial statements, and reporting on the financial statements. While other key standards address the core requirements for identifying and assessing and responding to the risks of material misstatement, ISA 240 expands on how these standards are applied with a fraud lens. The emphasis in ISA 240 is on risk identification and assessment and responding to the risks of material misstatement through modifying the nature, timing and extent of the work effort when there is a risk of material misstatement due to fraud. This highlights the importance of obtaining an understanding of the entity and its environment, the applicable financial reporting framework and the entity’s system of internal control with a fraud lens. The non-authoritative guidance illustrates the relationship and linkages between ISA 240 (The Auditor’s Responsibilities Relating to Fraud in an Audit of Financial Statements) and other ISAs when planning and performing an audit engagement and reporting thereon.


A clear understanding of the relationship between, and linkage of, ISA 240 and the other ISAs will assist the auditor to enhance audit execution when applying a fraud lens. This will in turn fulfil the auditor’s responsibilities under ISA 240 and other ISAs that contain the broader requirements for an audit. Included in the Guidance provided is a diagram that depicts the key areas that ISA 240 addresses and highlights the explicit references from ISA 240 to other ISAs that further strengthen the interrelationships between the auditing standards.

Context for the beginner

The “Fraud Lens” guidance publication can be downloaded Here.

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Email enquiries and questions to technical@saiba.org.za for further assistance.


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