Illegal Acts: The External Auditor’s Responsibilities

July 26, 2021

Published: The CAQ

Recent global corporate fraud scandals such as those related to Wirecard in Germany and Carillion in the United Kingdom have driven a focus by capital market participants on the auditor’s role in identifying and detecting fraud. Certain audit regulators, including the International Auditing and Assurance Standards Board (IAASB) and the Public Company Accounting Oversight Board (PCAOB) have taken action with respect to fraud. For example, the IAASB issued a discussion paper this past fall and held a series of roundtables in order to seek input from various stakeholders as to the auditor’s responsibilities pertaining to fraud within its’ auditing standards. Separately, in April 2021, the PCAOB released a Spotlight document that highlighted the PCAOB Staff’s outlook for 2021 and noted that fraud procedures would be an area of emphasis for its’ 2021 audit inspections.

Fraud can be inter-related to non-compliance with laws and regulations; however, the auditor’s responsibilities under PCAOB auditing standards to identify and detect a potential material financial statement misstatement due to fraud can differ from the auditor’s responsibilities related to illegal acts such as those resulting from non-compliance with laws and regulations. Zona de los archivos adjuntos


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