Auditors must obtain reasonable assurance that financial statements are free from material misstatement, whether caused by error or fraud John Selwood looks at the risks in management’s ability to override internal controls
Q. My firm has recently had a cold file review conducted by an external training provider who said that we are not properly addressing management’s ability to override internal controls. My firm does not handle large audits and we mostly conduct substantive procedures without reliance on internal controls. Why have we been advised this way?
A. The straightforward answer is that the clarified ISA (UK and Ireland) 240 The auditor’s responsibilities relating to fraud in an audit of financial statements, requires it.