Au Section 316

AU section 316 concentrates on the possibility of discovering fraud when auditing financial statements. The standard found in this Section details the responsibilities that auditors must fulfill in an audit pertaining to fraud. AU section 316 helps auditors understand the processes that need to be fulfilled as well as their responsibilities when performing an audit. In order to obtain reasonable assurance that the audit was conducted in compliance with AU Section 316, auditors must meet their obligation to ensure that the financial statements are free from material misstatements. Material misstatements could be caused by any errors or fraud but the auditors must gain enough evidence to give an opinion when performing an audit. The standard is broken down into various sections discussing the descriptions and characteristics of fraud, responding to assess fraud risk, exercising professional skepticism, the communication of possible fraud, and the documentation of fraud. First, the standard defines fraud and discusses the characteristics of fraud. Auditors
There are fraud risks risk that relate to the nature, timing and extent of the audit procedure. The auditors use their judgement to determine the extent of testing and types of testing performed in the audit. Auditors must question what they see and study the evidence obtained throughout the audit. It is important to be skeptical of all information to perform the audit in accordance with the standards. The auditors cannot allow previous engagements with a client to influence the audit they are performing at that time. They must be skeptical of management no matter how much the auditors may believe in the integrity of management. The auditors cannot let their guard down when performing an audit otherwise they run the risk of missing fraud and material