Wiley Practitioner's Guide to GAAS 2023, 2nd Edition

5AU-C 240 Consideration of Fraud in a Financial Statement Audit

• Technical Alert
• Scope
• Definitions of Terms
• Objectives of AU-C 240
• Requirements
  • Description and Characteristics of Fraud
  • Responsibilities of the Auditor
  • Professional Skepticism
  • Engagement Team Discussion about Fraud (Brainstorming)
  • Obtaining Information Needed to Identify Fraud Risks
    • Inquiries of Internal Auditors
    • Inquiries of Others within the Organization
    • Inquiries of Those Charged with Governance
    • Considering the Results of Analytical Procedures
    • Considering Fraud Risk Factors
  • Identifying Fraud Risks
  • Assessing Identified Risks
  • Responding to the Results of the Assessment of Risk of Material Misstatement
  • Evaluating Audit Evidence
  • Communication about Possible Fraud to Management and Those Charged with Governance
  • Documentation
  • Antifraud Programs and Controls
• AU-C 240 Illustrations

TECHNICAL ALERT

Although the Public Accounting Oversight Board (PCAOB) is focused on guidance for public companies and broker dealers, it offers information that can be valuable on audits of other entities. In June 2022, the PCAOB issued areas of focus for its inspections. Its alert emphasized current threats regarding fraud risk. See the preface to this volume for more information.

SCOPE

AU-C 240 focuses on the auditor's responsibility for fraud in a financial statement audit. AU-C 240 complements and expands on guidance in AU-C 315 and 330 regarding risks of material misstatements. (AU-C 240.01)

DEFINITIONS OF TERMS

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