Consideration of Fraud in a Financial Statement Audit

Consideration of Fraud in a Financial Statement Audit Supersedes Statement on Auditing Standards No. 82, Consideration ofFraud in a Financial Statement Audit (AICPA, Professional Standards, vol. 1, AU sec. 316); and amends SAS No. 1, Codification of Auditing Standards and Procedures (AICPA, Professional Standards, vol. 1, AU sec. 230, “Due Professional Care in the Performance of Work,” and SAS No. 85, Management Representations (AICPA,Professional Standards, vol. 1, AU sec. 333). Introduction and Overview 1. Statement on Auditing Standards (SAS) No. 1, Codification of Auditing Standards and Procedures (AICPA, Professional Standards, vol. 1, AU sec. 110.02, “Responsibilities and Functions of the Independent Auditor”), states, “The auditor has a responsibility to plan and perform the audit to obtain reasonable assurance about whether the financial statements are free 1of material misstatement, whether caused by error or fraud. [footnote omitted]” This Statement establishes standards and provides guidance to auditors in fulfilling that responsibility, as it relates to fraud, in an audit of financial statements conducted in accordance with generally 2accepted auditing standards (GAAS).2. The following is an overview of the organization and content of this statement: Description and characteristics of fraud. This section describes fraud and its characteristics. (See paragraphs 5 through 12.) The importance of exercising professional skepticism. This ...