In the planning phase, the audit team leader identifies and assesses the risks of material misstatement or non-compliance due to fraud and determines overall responses and the nature, timing and extent of further audit procedures to address the assessed risks. During the course of an audit, the audit team maintains professional scepticism, recognising the possibility that a material misstatement or non-compliance due to fraud may exist.
If the audit team leader identifies non-compliance by the audited body reporting information to the Clean Energy Regulator, or material misstatements in the subject matter, they must evaluate whether it is indicative of fraud. Fraud is an intentional act by one or more individuals among management, those charged with governance, employees, or third parties, involving the use of deception to obtain an unjust or illegal advantage.
Where a fraud or suspected fraud is detected, the audit team leader evaluates the implications of the misstatement or non-compliance for other aspects of the audit. For instance, it may impact the reliability of other evidence. The audit team leader communicates the matter to the appropriate level of management or those responsible for governance and informs the Clean Energy Regulator. ASA 240
The Auditor’s Responsibilities Relating to Fraud in an Audit of a Financial Report and ASAE 3410
Assurance on Greenhouse Gas Statements may also provide further guidance on how auditors may deal with identifying and reporting fraud.
All incidences of fraud or deliberate non-compliance must be immediately reported to the Clean Energy Regulator.
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