Does an auditor have a duty to detect error and fraud

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Does an auditor have a duty to detect error and fraud - why?

Any help would be much appreciated, Thanks.

shiprepairwoman

They investigate accounting practices to look for fraud but some may still slip through.
When they do things like confirm inventory they aren't going to look at every item in inventory they will pick a random sample to check. So if you had 40 silos of corn in inventory and the auditor counted them and confirmed one was full of corn they might miss the three that were filled with corn cobs and only the first 3 inches were corn.
They might also contact 10% of people who owe money to confirm the balance at the audit date and if they are all in agreement assume receivables were correct but miss the 5 bogus customers.
They don't always find all fraud but they need to make a reasonable attempt.

ANDY F

They have a duty to detect error but not to detect fraud. If they do come across fraudulent accounting, they have a moral obligation, if not a duty, to report it. If it's an in-house audit and they find the books gently simmering then you're history.
If an auditor is appointed specifically to detect fraud then yes, they have to report it.

****

Its their job.

spook542

They do have a duty to detect errors and fraud.
Auditors are appointed to ensure that the financial statements are correct, best paractise is bieing observed and to facilitate better practises, safeguading the revenue of the company.

It's a fact that, although they should, auditors do not detect fraud. This is not because they are incapable but for two other reasons:
1. fraudsters exploit the lack of controls or weaknesses in the system, auditors follow and test controls. it can therefore be said that the two sets (auditors and fraudsters) are treading different paths so the auditor will rarely come across them.
2. Some auditors (not all) are in audit as a stepping stone to something else so won't have the motivation to properly search for fraud. It is a difficult process and gets even harder when you actually find something, you don't make many friends when investigating fraud.

Mark B

No they don't. They have a duty to follow up on any suspicion of fraud or error and report to those charged with governance of the company. No where does it state it is up to the auditors to detect all frauds and errors;

Per the Companies Act, it is the responsibility of the directors to detect fraud and error and design systems to mitigate this.

news hound

auditors are employed for specific reason. Fraud and E rrors detection are well within their terms of reference if needs be.

AMBER D

The cute avatar is correct.

Nurain

In my school my Auditor master gave us a test on did auditor detect fraud? Many people agreed they detect fraud but they dont report the fraud they only report to the management whether the account show true and fair view so auditor express their opinion base on the financial statement given to them. Now am advising the auditing body to clear the question above.

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