ISA 240 (Revised), The Auditor’s Responsibilities Relating to Fraud in an Audit of Financial Statements
ISA 240 (Revised), The Auditor’s Responsibilities Relating to Fraud in an Audit of Financial Statements, has been revised to deliver clearer responsibilities, stronger risk response, and improved transparency. The revised standard clarifies the auditor’s responsibilities, emphasizes a fraud lens in the auditor’s risk assessment and the appropriate responses to identified risks, and provides greater transparency in the auditor’s reports of publicly traded entities.
In developing the revised standard, the IAASB undertook an extensive global consultation with regulators, investors, standard setters, and auditors across firm sizes and geographies. The revised standard’s structure incorporates scalability and proportionality to support consistent and effective application across a range of audit engagements.
The revisions also align with ISA 570 (Revised 2024), Going Concern, recognizing that fraud and financial distress are often interrelated risks that must be addressed together to bolster corporate transparency and resilience. ISA 240 (Revised) also becomes effective at the same time as ISA 570 (Revised 240): for periods beginning on or after December 15, 2026.
The IAASB encourages jurisdictions to consider early adoption of ISA 240 (Revised), ISA 570 (Revised 2024), and the forthcoming narrow-scope amendments for listed and public interest entities (PIEs) as a cohesive package. Together, these standards provide a stronger, more coordinated response to the risks of fraud and financial distress.