Revision of ISA 240 and Narrowing the Audit Expectation Gap Regarding Fraud

Christoffer Emil Danielsen

Student thesis: Master thesis

Abstract

The media and society have been addressing the issue of fraud over the last many years. They have addressed how auditors can improve in responding and identifying fraud regarding an audit of a financial statement. The International Auditing and Assurance Standards Board, IAASB, has been following this closely and has now decided to revise the International Standard on Auditing 240 regarding the auditor’s responsibilities regarding fraud in an audit of financial statements, ISA 240 and to also further narrow the Audit Expectation Gap that continues to exist between auditors and the public. The purpose of this thesis is to perform an analysis of this standard, by looking at the responses that IAASB has received regarding their discussion paper which was issued in September 2020. By looking at the responses it is possible to point out the biggest issues with the Audit Expectation Gap and therefore also figure out what to revise in the current standard. All the relevant responses to the discussion paper have been read and the major issues and factors which have been identified through this will be analyzed in this thesis. Issues such as professional skepticism, data analytics, accounting estimates, forensics, and communication with those charged with governance will be analyzed in this thesis. It is a long process to revise an auditing standard and it is still ongoing and in the early stages of revision. This thesis’ conclusion also serves as a response to IAASB’s discussion paper as this thesis will provide examples and suggestions on how IAASB can revise the audit standard and by that also narrow the Audit Expectation Gap.

EducationsMSc in Auditing, (Graduate Programme) Final Thesis
LanguageDanish
Publication date2022
Number of pages84
SupervisorsKim Klarskov Jeppesen