Auditor Responsibility for fraud detection

Fraud detection responsibility

Fraud detection and prevention responsibility lies on the management. Management will place appropriate control within organization for the prevention and detection of fraud.

Frauds are more difficult to detect

Frauds are more difficult to detect because of the following reasons.

1)    Frauds are well planned

2)    Management are involved in frauds

3)    Transaction are not recorded in the books of accounts

4)    Transaction are misinterpreted to auditor

Can auditor detect fraud?

Yeah, auditor can detect fraud, however, the auditor ability to detect fraud depends

·         Skills of perpetrator

·         Frequency of fraud attempt

·         Amount of fraud

·         Position of the person

Auditor Responsibility for fraud detection

Auditor is responsible that financial statement are free from misstatement as whole, therefore, though auditor is not responsible for detection of fraud , but , still there is some responsibility lies on the shoulder of auditor. Due to inherent limitation of audit, auditor cannot detect all the material misstatement due to fraud or error.

Auditor is responsible for maintaining professional skepticism for following factor

a)    Management can override controls

b)    Management can manipulate record

c)    Control over preparation and maintenance of record

d)    Reliability of record