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Chapter 53 4
2.2 Responsibilities in respect of fraud and error
Directors
 Primary responsibility for the
prevention and detection of fraud
 Implement an effective system of
internal control
 Create a culture of honesty, ethical
behaviour, and active oversight by
those charged with governance
 Consider the need for an internal
audit department to act as a
deterrent for fraud
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Auditors
 Obtain reasonable assurance that
the financial statements, taken as a
whole, are free from material
misstatement, whether caused by
fraud or error
 Maintain an attitude of professional
scepticism
 Consider any incentives to commit
fraud
 Discuss among the engagement
team, the client's susceptibility to
fraud
 Identify and assess the risks of
material misstatement due to fraud
 Enquire how management
assesses and responds to the risk
of fraud
 Enquire of the client if they are
aware of any actual or suspected
fraudulent activity