All 18 Fraud & Error Responsibilities questions
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What is the auditor's responsibility for fraud under ISA 240? Why is revenue recognition presumed to be a fraud risk? What should the auditor do if fraud is suspected or identified during the audit? What is the difference between the auditor's and management's anti-fraud responsibilities? Does an unmodified audit opinion guarantee there is no fraud? How does the auditor address the risk of management override of controls? How does discovering fraud affect the auditor's assessment of the whole audit? What are common financial statement fraud schemes auditors watch for? How do data analytics help detect fraud? What reporting obligations may arise when the auditor identifies fraud?
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Auditing & Assurance › Fraud & Error Responsibilities

What is the significance of the team's fraud discussion (brainstorming)?

Intermediate

Answer

ISA 240 requires engagement team members to discuss how and where the financial statements might be susceptible to material misstatement due to fraud, and how fraud could occur. This brainstorming shares knowledge, encourages skepticism, sets the tone for the audit, and helps design targeted procedures against identified fraud risks.
Real-world example In the fraud brainstorming, a senior recalls a prior client's revenue scheme, prompting extra cutoff procedures here.

Common follow-ups: What does the fraud discussion achieve? | Is it required by ISA 240?

ISA Standards Audit Evidence & Procedures Fraud & Error Responsibilities
All 18 Fraud & Error Responsibilities questions