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PSA-240-Redrafted - Auditing and Assurance Standards...

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Philippine Standard on Auditing 240 (Redrafted) THE AUDITOR’S RESPONSIBILITIES RELATING TO FRAUD IN AN AUDIT OF FINANCIAL STATEMENTS Auditing and Assurance Standards Council
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PSA 240 (Redrafted) 2 PHILIPPINE STANDARD ON AUDITING 240 (REDRAFTED) THE AUDITOR’S RESPONSIBILITIES RELATING TO FRAUD IN AN AUDIT OF FINANCIAL STATEMENTS (Effective for audits of financial statements for periods beginning on or after December 15, 2009) CONTENTS Paragraph Introduction Scope of this PSA ............................................................................................. 1-8 Effective Date .................................................................................................. 9 Objectives ....................................................................................................... 10 Definitions ....................................................................................................... 11 Requirements Professional Skepticism ................................................................................... 12-14 Discussion Among the Engagement Team ...................................................... 15 Risk Assessment Procedures and Related Activities ....................................... 16-24 Identification and Assessment of the Risks of Material Misstatement Due to Fraud .................................................................................................... 25-27 Responses to the Assessed Risks of Material Misstatement Due to Fraud ......................................................................................................... 28-33 Evaluation of Audit Evidence ......................................................................... 34-37 Auditor Unable to Continue the Engagement ................................................. 38 Management Representations ......................................................................... 39 Communications To Management and With Those Charged With Governance ...................................................................................... 40-42 Communications to Regulatory and Enforcement Authorities ...................... 43 Documentation ............................................................................................... 44-47 Application and Other Explanatory Material Characteristics of Fraud ................................................................................. A1-A6 Professional Skepticism ................................................................................. A7-A9 Discussion Among the Engagement Team .................................................... A10-A11 Risk Assessment Procedures and Related Activities ..................................... A12-A27
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PSA 240 (Redrafted) 3 Identification and Assessment of the Risks of Material Misstatement Due to Fraud ............................................................................................ A28-A32 Responses to the Assessed Risks of Material Misstatement Due to Fraud ........................................................................................................ A33-A47 Evaluation of Audit Evidence ....................................................................... A48-A52 Auditor Unable to Continue the Engagement ............................................... A53-A56 Management Representations ....................................................................... A57-A58 Communications To Management and With Those Charged With Governance .................................................................................... A59-A63 Communications to Regulatory and Enforcement Authorities ..................... A64-A66 Appendix 1: Examples of Fraud Risk Factors Appendix 2: Examples of Possible Audit Procedures to Address the Assessed Risks of Material Misstatement Due to Fraud Appendix 3: Examples of Circumstances that Indicate the Possibility of Fraud Acknowledgment Philippine Standard on Auditing (PSA) 240 (Redrafted), “The Auditor’s Responsibilities Relating to Fraud in an Audit of Financial Statements” should be read in the context of the “Preface to the Philippine Standards on Quality Control, Auditing, Review, Other Assurance and Related Services,” which sets out the authority of PSAs.
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PSA 240 (Redrafted) 4 Introduction Scope of this PSA 1. This Philippine Standard on Auditing (PSA) deals with the auditor’s responsibilities relating to fraud in an audit of financial statements. Specifically, it expands on how PSA 315, “Identifying and Assessing the Risks of Material Misstatement Through Understanding the Entity and Its Environment,” and PSA 330, “The Auditor’s Responses to Assessed Risks,” are to be applied in relation to risks of material misstatement due to fraud.
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