The International Auditing and Assurance Standards Board (IAASB) today proposed a significant strengthening of its standard on auditors’ responsibilities relating to fraud. Recent corporate failures throughout the world have underscored the benefits of clarifying and enhancing the role of auditors in responding to fraud and suspected fraud as a means of enhancing public trust in financial reporting.
IAASB Chair Tom Seidenstein emphasized that the proposed revisions define the expectations in relation to fraud, delineate more robust procedures, and increase transparency about the auditors’ responsibilities and fraud-related procedures in the auditor’s report. “While many participants in the financial reporting ecosystem, particularly management and those charged with governance, have a role in preventing fraud, our standard focuses on the key role that auditors play. While auditors are not policemen, they can and must play a role in identifying and responding to material misstatements of the financial statements due to fraud and communicating their work to users. This proposed standard is an important step forward,” said Mr. Seidenstein.
Key Changes in the Proposed Revisions The proposed revisions to International Standard on Auditing 240 (Revised), The Auditor’s Responsibilities Relating to Fraud in an Audit of Financial Statements, include:
Clarified auditor responsibilities relating to fraud in an audit.
Emphasized professional skepticism to ensure auditors remain alert to possible fraud and exercise professional skepticism throughout an audit.
Strengthened identification and assessment of risks of material misstatement due to fraud.
Clarified response to fraud or suspected fraud identified during the audit.
Increased ongoing communication with management and those charged with governance about fraud.
Increased transparency about auditors’ responsibilities and fraud-related procedures in the auditor’s report.
Enhanced audit documentation requirements about fraud-related procedures.
Video Series Planned to Facilitate Understanding During the consultation period, IAASB will release a videos series to help stakeholders understand the proposed revisions and their implications for strengthening the financial reporting ecosystem. Stay updated on upcoming events by following the IAASB on LinkedIn and/or X (formerly Twitter) and register/subscribe to our mailing list.
How to Provide Feedback The IAASB invites all stakeholder to submit their comments using the Response Template, designed to facilitate a structured response and streamline feedback collation and analysis. Respondents are encouraged to share their insights by June 5, 2024.
The International Accreditation Forum (IAF) and the International Ethics Standards Board for Accountants (IESBA) today announced a strategic partnership to advance the use of a common framework of high standards of ethical conduct to underpin trust in the assurance of sustainability information.
After extensive engagement over the previous six months, the IAF and the IESBA have agreed to common objectives to support the growth of transparent, relevant, and trustworthy corporate sustainability disclosures. The cornerstone of the partnership is the IAF’s stipulation to national accreditation bodies around the world that the IESBA’s proposed International Ethics Standards for Sustainability Assurance (including International Independence Standards) (IESSA) are to be used when accrediting and authorizing conformity assessment bodies to carry out assurance work on corporate sustainability disclosures.1 The IESBA recently launched the public consultation on the proposed IESSA and related standards, and is expected to finalize the standards by the end of the year.
Among the key elements of the agreement, both the IAF and the IESBA:
Recognize the importance of having a global baseline of high-quality ethics (including independence) standards consistently applied by, and enforced on, all providers of assurance services on corporate sustainability disclosures, whether audit firms, conformity assessment bodies or others.
Agree on the importance of establishing connections between the two organizations and to promote consistent use of a global framework of high-quality ethics standards for sustainability assurance.
Will collaborate to determine how to incorporate the IESSA as part of the accredited verification activities of ISO/IEC 17029-compliant programs as they apply to assurance of sustainability information.
Will share strategic insights and perspectives on their respective work as it relates to assurance of corporate sustainability disclosures.
Will explore collaboration with respect to training activities for accreditation bodies and conformity assessment bodies in relation to the proposed IESSA.
Corporate sustainability disclosures provide stakeholders with vital insights into a company’s sustainability practices. Beyond compliance with evolving regulations and standards, sustainability disclosures offer companies a competitive advantage, attracting socially conscious investors, enhancing brand loyalty, and fostering resilience in the face of environmental and social risks. Assurance of these disclosures plays a crucial role in ensuring trust in reporting, particularly given the subjectivity, prospectivity and immaturity of the data underpinning the disclosures.
“Trustworthy sustainability disclosures are vital in demonstrating a company's commitment to sustainability practices,” said Emanuele Riva, IAF Chair. “Through this partnership, we strive to foster trust and confidence in sustainability reporting worldwide.”
Gabriela Figueiredo Dias, IESBA Chair, said: “A robust, global ethical framework, developed by the IESBA under public oversight and embraced by the IAF, will spur growth in the supply of sustainability assurance practitioners to meet the rapidly increasing market demand for high- quality sustainability information. I am proud of the IESBA and the IAF embarking on this exciting partnership together, which is undoubtedly in the public interest.”
1when included in the ISO/IEC 17029 programme
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About the International Accreditation Forum (IAF)
The IAF is a global association of accreditation bodies, conformity assessment body associations and other organizations involved in conformity assessment in fields including validation/verification and the certification of management systems, products, processes, services and persons.
The IAF promotes the worldwide acceptance of certificates of conformity and validation/verification statements issued by conformity assessment bodies accredited by IAF Multilateral Recognition Arrangement (MLA) signatories, and seeks to add value for all stakeholders through its activities and programs.
About the International Ethics Standards Board for Accountants (IESBA)
The International Ethics Standards Board for Accountants® (IESBA®) is an independent global standard-setting board. The IESBA’s mission is to serve the public interest by setting ethics (including independence) standards as a cornerstone to ethical behavior in business and organizations, and to public trust in financial and non-financial information that is fundamental to the proper functioning and sustainability of organizations, financial markets and economies worldwide.
Along with the International Auditing and Assurance Standards Board (IAASB), the IESBA is part of the International Foundation for Ethics and Audit (IFEA). The Public Interest Oversight Board (PIOB) oversees IESBA and IAASB activities and the public interest responsiveness of the standards.
Professional accountants in business (PAIB) play a vital role within various sectors such as commerce, industry, financial services, education, and the public and non-profit sectors. IFAC’s PAIB Advisory Group, established in 1977, is a global forum of finance and business leaders advising the global accountancy profession and its members on critical areas such as sustainability and digital transitions so that PAIBs are well prepared to meet the evolving needs of both business and the public sector in the future.
The newest PAIB Advisory Group members are:
Mike Driver, Past President, CIPFA & Independent Non-Executive Director (United Kingdom)
Ruth Gardiner Forbes,President and CEO, Fortis TCI Ltd (Turks and Caicos Islands)
Lisa Kelley,Managing Director, Floating Interest Corporation (United States of America)
With these additions, the PAIB Advisory Group has achieved gender parity. Sanjay Rughani remains Chair and Sharon Ditchburn has been appointed Deputy Chair.
"Every member brings a distinctive and valuable viewpoint on the contributions of professional accountants in business and finance leadership,” said Sanjay Rughani, Chair, IFAC PAIB Advisory Group. “We are privileged to welcome these new members who will share their diverse experiences and offer strategic insights on the profession, expanding its contribution to sustainable economic development worldwide and serve as global champions for the profession.”
The continuing PAIB Advisory Group members are:
Sanjay Rughani, Chair, CEO, Standard Chartered Bank Uganda (Uganda)
Zia-Ul-Mustafa Awan, CFO and Business Administrator, Pakistan Expo Centres Private Limited (Pakistan)
Anastasija Boljević, Secretary General, Institute of Certified Accountants of Montenegro (Republic of Montenegro)
Esther Bosch, Director Risk & Audit, Royal Schiphol Group (Netherlands)
Ibrahim (Murat) Çağlar, Chief Financial Officer,Sanovel (Türkiye)
Eric Freudenreich, Independent Non-Executive Director (France)
Lindawati Gani, Professor in Management Accounting, Faculty of Economics and Business, Universitas Indonesia (Indonesia)
Tim Herrod, Vice President, Global Procurement, Albemarle Corporation (Canada)
Margaret Muinde, Financial Controller, Kenya Roads Board (Kenya)
Maria del Dado Alonso Sanchez, Group CFO, Berlin Brands Group (Spain)
Milton Segal, Executive Director: Standards, South African Institute of Chartered Accountants (South Africa)
Muhammad Samiullah Siddiqui, CFO, Oxford University Press Pakistan (Pakistan)
Nancy Sau Ling Tse, JP, Independent Non-Executive Director [Hong Kong (Special Administrative Region of China)]
Ichiro Waki, Group CEO, JBA Group (Japan)
Gloria Zvaravanhu, Managing Director, Old Mutual Insurance Company (Zimbabwe)
Member expertise is drawn upon to deliver timely reports, articles, and case studies relevant to professional accountants in business across the globe. Explore their latest insights.
About IFAC
IFAC is the global organization for the accountancy profession dedicated to serving the public interest by strengthening the profession and contributing to the development of strong international economies. IFAC is comprised of 180 members and associates in 135 countries and jurisdictions, representing more than 3 million accountants in public practice, education, government service, industry, and commerce.
About the Professional Accountants in Business (PAIB) Advisory Group
Professional accountants in business comprise a significant part of the profession working in commerce, industry, financial services, education, and the public and not-for-profit sectors. The Professional Accountants in Business (PAIB) Advisory Group focuses on ensuring these accountants meet the future needs of business and the public sector.
