Legal assessment of fraud by auditor

Issue: № 2, 2021

Doi: https://doi.org/10.37634/efp.2021.2.5

The paper analyzes the International Standards on Auditing requirements for the the auditor to identify and assess the financial reporting distortions due to fraud. It is established that the practical application of the principle of professional skepticism requires a thorough and comprehensive Inspections of auditor with the use of variety of knowledge to identify possible offenses. The study shows that appropriate knowledge of the legal aspects of fraud is important in this regard. It is with their help in considering of the purely economic and financial content of distortions in financial statements, the auditor has the opportunity to determine to what extent they contradict applicable law. As practice shows, without the use of such knowledge the auditor's professional judgment is not properly substantiated. In these circumstances the auditor's professional training should include the necessary knowledge and some experience of legal assessment of fraud at the appropriate competent level in order to obtain sound judgments regarding the detection of misstatements in the financial statements.

Keywords : audit, fraud, legal assessment, distortion of financial statements

References:

1. Directive 2006/43/EC of the European Parliament and of the Council of 17 May 2006 on statutory audits of annual accounts and consolidated accounts. URL: https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/ ?uri=CELEX:32006L0043&from=EN

2. Handbook of International Quality Control, Auditing, Review, Other Assurance, and Related Services Pronouncements. URL: https://mof.gov.ua/uk/mizhnarodni-standarti-auditu (in Ukrainian).

3. Criminal Code of Ukraine. Official web-portal of the Parliament of Ukraine. “Legislation of Ukraine” URL: https://zakon.rada.gov.ua/laws/show/2341-14 (in Ukrainian). 

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