المملكة: "Board of auditors"The risk of fraud by bypassing oversight threatens the financial statements… and suspicion is required
Saudi Authority for Auditors and Accountants "Sukba" The risk of fraud related to management bypassing control tools is considered a mandatory risk in International Auditing Standard No. (240), stressing that its non-existence cannot be assumed or refuted. Due to its widespread nature and its potential impact on the financial statements as a whole.
The Authority explained in "A guide to effectively assessing risks and testing management override of controls, including overridden accounting estimates"Misstatements in the financial statements arise from either fraud or error, and the fundamental difference between them lies in… "Intention"; Fraud is intentional behavior, while error is unintentional, noting that management’s ability to tamper with records or bypass control tools gives it a unique position that may lead to the preparation of fraudulent financial reports.
Dealing with risk
The Authority indicated that the risk of management overreach is not limited to a specific field, but rather its impact may extend to categories of transactions, account balances, and disclosures, which makes it a total risk at the level of financial statements, and requires professional treatment based on careful evaluation and design of audit responses. Directed.
She pointed out that dealing with this danger requires preservation "Professional skepticism" Throughout the audit process, consider the possibility of intentional conduct when planning and implementing procedures; Because error detection procedures are not sufficient in themselves to detect fraud cases.
It is noteworthy that the Saudi Authority for Auditors and Accountants recently launched an initiative "Accounting disclosures"; With the aim of enhancing professional awareness of the implications of standards and practices related to audit quality, and highlighting the highly sensitive aspects of financial statements; This contributes to raising the efficiency of auditors, enhancing transparency, and establishing confidence in financial reports among its users.
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