IAASB Enhances Fraud Detection in Financial Audits

The International Auditing and Assurance Standards Board (IAASB) has revised International Standard on Auditing (ISA) 240 to enhance the auditor’s role in detecting fraud in financial statement audits. The updated standard aims to address stakeholder concerns, clarify auditor responsibilities, and strengthen risk assessment and response to fraud. It also promotes transparency in auditor reports for publicly traded entities.

Global consultations with various stakeholders, including regulators, financial statement users, standard setters, and auditors, informed the revisions to the fraud standard. The IAASB incorporated scalability and proportionality to facilitate application across different audit engagements. The revisions align with ISA 570 (Revised 2024) on Going Concern, recognizing the interconnected risks of fraud and financial distress.

IAASB chair Tom Seidenstein emphasized that the revised standard directly addresses public interest concerns by improving audit quality, fraud risk assessment, and reporting transparency. The IAASB fraud task force chair Julie Corden highlighted the practical and meaningful shift in how auditors assess and respond to fraud risks. ISA 240 (Revised) will be effective for audits of financial statements starting on or after 15 December 2026.

In May 2025, IAASB announced the retirement of the greenhouse gas assurance standard, ISAE 3410, in favor of the International Standard on Sustainability Assurance (ISSA) 5000. The new sustainability assurance framework, effective from 15 December 2026, will cover all types of sustainability information, including greenhouse gas emissions.

Read more at Yahoo Finance: IAASB updates fraud standard