The PCAOB reminded auditors to be diligent about fraud in a report that draws on important or recurring observations made during the board’s inspection of audit work performed by registered public accounting firms.
The report addresses several topics, including:
Auditors’ overall approach to the detection of financial fraud.
Required brainstorming sessions and fraud-related inquiries.
Auditors’ response to fraud risk factors.
Financial statement misstatements.
Fraud associated with management override of controls.
The report does not change, propose to change or provide new interpretations of any existing standards. The report’s purpose is to generally focus auditors on being diligent about their fraud-related responsibilities and to provide information that audit committees may find useful in working with auditors.
The report is available at www.pcaobus.org/Inspections/Other/2007/01-22_Release_2007-001.pdf.