Enhancing Auditors’ Approach to Addressing Fraud Risks: Insights from AICPA Auditing Standards Board Outreach

The AICPA Auditing Standards Board (ASB) has recently conducted outreach to help auditors enhance their approach to addressing fraud risks. The ASB interviewed over two dozen professionals with forensic and fraud expertise to gather insights on techniques auditors can consider when performing financial statement audits in accordance with GAAS.

The interviews, which lasted about an hour each, covered significant content related to fraud risks. The professionals interviewed are not primarily audit professionals but work in forensic services or support audit teams in fraud-related matters.

Key takeaways from the interviews include suggestions related to maintaining professional skepticism, conducting fraud brainstorming sessions, and making effective fraud-related inquiries of management and others. The professionals emphasized the importance of adopting a forensic-like perspective, encouraging unpredictability in audit procedures, leveraging data analytics findings, and engaging in ongoing fraud brainstorming.

Additionally, the professionals provided suggestions on recharacterizing fraud inquiries as discussions, considering the frequency of fraud inquiries, engaging in face-to-face interactions, and challenging client explanations with supporting evidence. They also recommended conducting a pressure test, inquiring of personnel throughout the entity, and understanding the client’s whistleblower hotline.

Overall, the insights gathered from the ASB interviews aim to help auditors improve their approach to addressing fraud risks in financial statement audits. By incorporating the suggested techniques, auditors may enhance their ability to detect and respond to potential fraud, ultimately strengthening the audit process.