Red flags and fraud triangles
Professional scepticism and the proper application of ISAs are essential to planning an audit that will take account of fraud risk and identify fraud. Chris Clements and Sarah Hick from Grant Thornton highlighted this at their recent faculty lecture at Chartered Accountants’ Hall.
All businesses are vulnerable to the actions of a determined fraudster. However, any business that does not have effective anti-fraud controls in place is a sitting target – and the costs of failing to detect fraud can be vast.
So practitioners must be smart when considering fraud as part of their risk assessment. They must apply audit procedures skilfully to take account of the fraud risks identified and demonstrate a high level of professional scepticism when carrying out and documenting their work. Auditors should be mindful of: