ACCA AAA ^INT Syllabus B. Professional and Ethical Considerations - Management and Auditor Responsibilities - Notes ^{2 / 5}

These are:

1. Safeguards created to avoid fraud and error using internal controls

2. Internal audit is responsible for monitoring and implementing these

Auditor Responsibilities

1. If fraud or error leads to a material misstatement, the auditor is responsible for detecting it

2. If immaterial, these should be reported to those charged with governance, but there is no responsibility to detect them.

3. The inherent limitations of audit mean that the auditor cannot guarantee that the financial statements are free from fraud and error.

4. At the Planning Stage

   The auditor must consider the risk of material misstatement due to fraud and error when planning and performing their audit

If fraud is discovered

Report it to the audit committee or

Highest level of management (if not involved in the fraud), or

Shareholders if the fraud is by those in senior management