Page 36 - Patisserie Valerie Teaching Note

Chairperson Reeves of the BEIS noted that according to the

Financial Reporting Council’s ISA (international standard on

auditing) rules, auditors must pick up material

misstatements where they are due to fraud or error.

In an industry beset by scandals over the past 18 months

MPs of the BEIS had a rich hunting ground when they also
questioned audit quality, lack of competition and auditor

scrutiny of corporate dividends. But this could pale into

insignificance in terms of the damage Dunckley’s “car-crash”

testimony had done to the auditing profession.

Management has the responsibility for financial statements

not auditors. But auditors do not have the responsibility to

detect all fraud so perhaps a more rigorous following by

auditors of the detection process such as the Two Step

model should be followed and acted upon.