Annual Audit Manual

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5513 Involvement of the Internal Specialist for Fraud
Jun-2018

In This Section

Involvement of the Internal Specialist for Fraud

Areas where it might be appropriate to involve the Internal Specialist for Fraud

Overview

This topic explains:

  • What situations where the involvement of the Internal Specialist for Fraud may be needed.
  • Examples of areas on the audit where it may be appropriate to involve the Internal Specialist for Fraud.
Involvement of the Internal Specialist for Fraud

OAG Guidance

The level and nature of involvement of the Internal Specialist for Fraud can take different direction. The Internal Specialist for Fraud and his/her team can support the audit team in the following ways:

  • Consulting. It may be sufficient for the Internal Specialist for Fraud to be consulted at various stages of the audit for advice as to how to identify or address fraud risk

  • Coaching. It may be necessary for the Internal Specialist for Fraud to become more directly involved at a more detailed level, e.g., advising on specific fraud detection audit procedures; assisting in the evaluation of the results of audit procedures and/or the quality of evidence

  • Completing. It may be appropriate to involve the Internal Specialist for Fraud in the performance of specific fraud detection audit procedures. This may be necessary where it is decided to carry out procedures that require fraud specialist skills, or where the results of audit testing indicate the possible existence of fraud.

The Internal Specialist for Fraud will involve the Fraud Support Team when appropriate.

Areas of involvement where it might be appropriate to involve the Internal Specialist for Fraud

OAG Guidance

In addition to the circumstances described in OAG Audit 3081, the use of the Internal Specialist for Fraud is advisable in many other circumstances. The following are examples of areas of the audit where it may be appropriate to involve the Internal Specialist for Fraud in a consulting, coaching or completing role:

  • Where significant frauds have occurred during the year which have been investigated either internally by the entity or have been contracted out to other technical experts to investigate, the Internal Specialist for Fraud can assist in the evaluation of the investigation carried out, the validity and completeness of its conclusions and its impact, if any, on the period-end financial statements.

  • Where any audit procedure brings evidence to light that indicates the possibility of fraud, the Internal Specialist for Fraud and Legal Services may assist the audit team in assessing appropriate investigative steps to determine the extent of fraud and its impact on the financial statements.

  • At any stage of the audit, the Internal Specialist for Fraud can assist in communicating with the entity on fraud risk issues, for example: explaining the risks and the approach to those risks; explaining specific tests and inquiries; communicating sensitive findings.

  • Fraud risk assessment at the Acceptance & Continuance assessment stage.

  • Participation at (or even facilitation of) team meetings where fraud risk is discussed.

  • Interviewing management or other key entity staff about matters relevant to fraud risk.

  • Identification of fraud-related business and audit risk throughout the audit.

  • Assistance at the planning stage in determining if fraud risk is appropriately addressed at the entity level and/or in relation to specific components.

  • Assessing controls designed to counter fraud risk, whether for regulatory purposes or simply in response to high entity expectations in this regard.

  • Design of specific audit procedures to address fraud risks.

  • Evaluating the quality/reliability of audit evidence from a fraud perspective at any stage.

  • Assessment of the results of the interim audit or any other pre-final work in terms of findings related to fraud risk.

  • Conduct of specific audit procedures as part of the audit team and documentation and communication of conclusions.

  • Assessment of results of audit procedures carried out by other members of the audit team.

  • Overall assessment of the results of audit testing as a whole or in relation to one or more financial statement areas and of the sufficiency and appropriateness of the audit evidence obtained with regard to addressing fraud risk.

The nature and extent of the involvement of the Internal Specialist for Fraud in the audit will ultimately be determined through discussions between the audit engagement leader and the Internal Specialist for Fraud.

For detailed guidance on using the work of specialists and experts refer to OAG Audit 3090 and OAG Audit 3100. For detailed guidance on consultations refer to OAG Audit 3081.