Publication

3 February 2021

Fraud: recommendations to strengthen the financial reporting ecosystem

Corporate fraud is a serious issue that affects us all. Its consequences can weaken the public’s confidence in markets and have long lasting damaging effects on society. The COVID-19 crisis has also increased the pressure on companies. This has created new opportunities to commit fraud making companies more vulnerable to corporate failure.

This publication, with its counterpart on going concern, presents recommendations to strengthen the financial reporting ecosystem. It takes another look into all key players’ role (including auditors, companies’ boards and management, legislators, standard setters and regulators) who must take a coordinated approach to achieve tangible results in tackling fraud. With this aim we propose the following recommendations:

  • require companies to have and publicly report on a fraud risk management system
  • pay specific attention to senior management fraud
  • mandate an audit committee in all public interest entities
  • make early warning mechanisms for auditors effective
  • clarify auditing standards for a common understanding of the auditor’s role
  • improve auditors’ access to knowledge and awareness about fraud
  • auditors to clearly communicate their work and conclusions about fraud

We also invite relevant parties to explore how to use technology and forensic experts in the most effective way within financial statements audits.

We call for a joint effort of key parties to strengthen the ecosystem. To this end, we ask you to send your thoughts and opinions on our recommendations to [email protected]. The original deadline for submissions – 30 April 2021 – has been extended to 30 May 2021.

Summary:

Related content

Consultation responseIASB’s third agenda consultation, EFRAG’s draft comment letter and own proactive research agenda consultation

13 July 2021

Consultation responseIIASB’s proposed Global Internal Audit Standards

1 June 2023

UpdateAudit Policy

24 May 2023

Consultation responseIAASB’s consultation on proposed Part 10, Audits of Group Financial Statements of the proposed ISA...

3 May 2023

NewsAccountancy Europe calls for an ambitious EU due diligence framework

26 April 2023

Consultation responseIAASB’s consultation on proposed International Standard on Auditing 500 (revised): audit evidence

24 April 2023

UpdateAudit Policy

19 April 2023

Consultation responseIAASB’s consultation on Proposed Strategy and Work Plan for 2024-2027

12 April 2023

NewsTraining Italian accountants to take up the sustainability challenge

20 March 2023

PublicationDynamics influencing auditor choice in the Public interest entity market

17 March 2023

UpdateAudit Policy

17 March 2023

NewsFinnish auditors gearing up for a comprehensive ESG training

3 March 2023

UpdateAudit Policy

10 February 2023

PublicationMulti-stakeholder analysis of corporate failures

8 February 2023

Consultation responsePCAOB’s consultation on new quality control standard

1 February 2023

NewsCollaboration – the key to high-quality sustainability education framework for accountants

23 January 2023

PublicationKey factors to develop and use audit quality indicators

13 January 2023

PublicationIndependent assurance on ESEF – the block tagging requirement

15 December 2022

UpdateAudit Policy

9 December 2022

NewsJoint statement on the Corporate Sustainability Due Diligence Directive

8 December 2022

EventReducing corporate fraud risk: European perspectives

8 December 2022

Sign up for our newsletter

* indicates required
Would you like to subscribe to our newsletter?
On which topics would you like to receive news?