This move comes in response to the critical role high-quality audits play in ensuring the smooth functioning of capital markets. Recent international corporate failures and significant accounting restatements have heightened scrutiny on all participants in the financial reporting system, emphasizing the importance of confidence in audits. As fraud remains a focal point, the IAASB seeks to strengthen auditor duties concerning fraud detection and prevention to better serve the public interest and bolster trust in financial reporting.

The changes will:

• clarify the auditor’s responsibilities about fraud in financial statement audits;
• strengthen the auditor’s procedures; and 
• include more detail about fraud in the auditor’s report. 

The proposed revisions are expected to significantly strengthen the IAASB’s standard on auditors’ responsibilities related to fraud by defining the expectations in relation to fraud, delineating more robust procedures, and increasing transparency about the auditors’ responsibilities and fraud-related procedures in the auditor’s report.

Access the explanatory memo on the IASSB’s website.