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It is the management's responsiblity to detect fraud not of the auditor. However, if such things come to his knowledge then the auditor should take actions according to the relavant applicable standards.e.g report to SOCA in case of money laundring.
Partially. Depending on the situation/nature of the fraud, it is possible for anybody to eventually detect a fraud, be it the management or the auditors. It isn't particularly a black and white scenario as to whose responsibility is it to detect them.For eg. Internal control is one of the ways to stop/detect frauds and it is the managements primary responsibility to design, implement and monitor those controls. Therefore, technically it is on the management to ensure that no fraud takes place.The auditor's responsibility is to express an opinion on the financial statements. Frauds can be concealed by the management or others too and also, the auditors give a reasonable assurance (NOT complete assurance) of the financial statements. To give complete assurance, they will need to check everything and not just the important areas of financial - doing this is not possible because it's going to take an unreasonable amount of time and cost to do so.Therefore, an auditors responsibility is to express an opinion on the financial statements rather than detecting frauds. In case they come across frauds, abnormalities etc. - all of it needs to be reported without bias since they are independent by nature. If the statements in itself as a whole are misleading, fraudulent etc. the auditor should withdraw from the engagement.
In short, the management has to ensure that the fraud shouldn't take place. The auditor has to ensure that they give reasonable assurance and express fair/true/unbiased opinions of financial statements. There is literally nobody who is liable to DETECT frauds unless they havn't discharged their duties in a prescribed manner.
Based on auditing standards, it is not the responsibility of auditor to detect fraud. However, he is responsible to make sure that the accounting system and internal control structure is proper to prevent any loss of company’s assets. In addition, free responsibility of fraud assumes a due professional care of the auditor work. Thus, Fraud detection is a responsiblity of managment.
auditor should hold abilities to find and see the red flags but not required from him to detect all fraud
Auditor is responsible to make sure that system is working in best interest of the organization and to report any fradaulant activities at any level to audit committee and the board.
it is not the responsibility of the auditor to detect fraud, he is responsible to identify the fraud and higlight this para according to the rules.................
