Statement on Auditing Standards No 82 Consideration of Fraud in a Financial Statement Audit
... 82: Consideration of Fraud in a Financial Statement Audit 2. Statement on Auditing Standards superceded or amended by SAS no.82 3. ... 82 4. ... Materiality and Audit Risk 6. ... Statement on Auditing Standards No. 82: Consideration of Fraud in a Financial Statement Audit Statement on Auditing Standards no.82 was issued in February of 1997 and went into effect December 15, 1997. ... 82 was issued to help with the expectation gap between the public and the accounting community concerning misstatements to the financial statements. The previous SAS describing auditor responsibility for detecting errors and irregularities to financial statements did not clearly clarify the role of the auditor involving fraudulent misstatements to the financial statements. The public believed the auditor was responsible for finding all evidence of errors or fraudulent material, but the prior SAS stated that the auditor only had to detect irregularities in the financial statements. ... 82 is to outline to the auditor his/her responsibility in planning and performing an audit to obtain reasonable assurance on whether there are material misstatements to the financial statements caused by errors or fraud. This SAS clarifies but does not increase the responsibility of the auditor to detect fraud. It is only in conjunction with the financial statements, it is not meant to imply that the auditor will find all fraudulent activity within the company. The SAS however, does require the auditor to specifically assess risk of misstatements due to fraud on every audit. It provides categories of fraud risk factors that the auditor should consider in making that assessment. ... Another requirement is that the auditor documents in workpapers an assessment of risk of material misstatements due to fraud, all risk factors identified in audit engagement and auditorˇ¦s response, and any other factors or conditions the auditor concludes is appropriate. Fraud, as defined by the AICPA, is the intentional misstatements or omissions in financial statements. ... 82 states that there are two types of fraud, fraudulent reporting and misappropriation of assets. ... If the misstatement is material, the auditor must determine whether it is fraudulent or not, and if it is fraud, suggest that the client consult with legal counsel. Any fraud involving senior management, and any fraud found material should be reported to the audit committee. Before consulting anyone about a misstatement, the auditor must make sure audit implications have been adequately considered.