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ISCA provided comments on IAASB’s Exposure Draft on proposed ISA 240 (Revised).
One key revision is new requirements for the auditor to communicate key audit matters (KAMs) related to fraud, and if there are no fraud related KAMs to communicate, the auditor needs to include a statement to that effect in the auditor’s report.
We shared concerns that the requirement to specifically identify fraud related KAMs may lead to the perception that the auditor has directed greater work effort in relation to fraud as compared to other significant risks. Also, a statement indicating that there are no KAMs related to fraud may be misconstrued as an affirmative statement by the auditor that there is no fraud. These could perpetuate the misconception on the auditor's responsibility in relation to fraud and further widen the expectation gap.
Click here to read our detailed comments.
Click here for the IAASB’s Exposure Draft.