Difference between Audit and Fraud Examination

 Despite popular belief, standard audits of financial accounts do involve some responsibility for detecting fraud. The author discusses the distinctions between the fraud audit and the standard audit while dispelling some popular misconceptions and highlighting some commonalities. He believes that all auditors have a responsibility to watch out for fraud.

The defence line is frequently "an audit of financial statements is not a fraud audit" when an auditor has missed a significant financial statement fraud misstatement. According to the author, this comparison incorrectly implies that an auditor of financial statements has no obligation to uncover fraud, which undermines the public's faith in the calibre and value of independent audits. It can also misrepresent the facts that are analysing the conduct of the auditor after a significant fraud that went undetected, including boards of directors and audit committees who are considering reappointment, judges and juries who are deciding liability, and even audit firms themselves who are assessing their own guilt and deciding whether to change firm policies and procedures.

The impact on the integrity of the audit process is even higher; if the audit team believes that spotting fraud is not actually the role of an auditor, then following the auditing standards' requirements for fraud detection may become a routine task rather than the main objective of the audit.


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Adarsh R


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