The International Auditing and Assurance Standards Board (IAASB) has revised International Standard on Auditing (ISA) 240, focusing on the auditor’s responsibilities related to fraud in financial statement audits.
The updated fraud standard responds to global scrutiny and stakeholder concerns about the auditor’s role in detecting fraud, aiming to further build public trust.
According to the IAASB, the revised standard clear up auditor responsibilities, stresses a fraud lens in risk identification and assessment, and defines appropriate responses to assessed risks.
It also provides transparency in auditor reports for publicly traded entities and reinforced professional scepticism.
The IAASB said it conducted global consultations with regulators, financial statement users, standard setters, and auditors across firm sizes and geographies.
The standard includes scalability and proportionality to support the application across various audit engagements.
The revisions are also in line with ISA 570 (Revised 2024), Going Concern, as fraud and financial distress are interconnected risks.
IAASB chair Tom Seidenstein said: “These revisions directly address core public interest concerns regarding fraud. By clarifying responsibilities, strengthening how auditors assess and respond to fraud risks, and enhancing transparency in reporting, the revised standard better supports high audit quality and delivers more decision-useful information to users of financial statements.”
IAASB fraud task force chair Julie Corden said: “Stakeholders made it clear: achieving consistency was necessary, but not sufficient.
“This standard represents a practical and meaningful shift in how auditors assess and respond to fraud risks.”
ISA 240 (Revised) becomes effective for audits of financial statements for periods beginning on or after 15 December 2026.
The IAASB encouraged early adoption of ISA 240 (Revised), ISA 570 (Revised 2024), and forthcoming narrow-scope amendments for publicly traded entities.
In May 2025, IAASB announced it will retire its greenhouse gas assurance standard, ISAE 3410, as it introduces the International Standard on Sustainability Assurance (ISSA) 5000.
The new sustainability assurance framework, effective from 15 December 2026, covers all types of sustainability information, including greenhouse gas emissions.
“IAASB updates fraud standard” was originally created and published by The Accountant, a GlobalData owned brand.
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