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 responseEC’s corporate sustainability due diligence proposal

20 May 2022

EventAudit quality: definition, drivers and indicators

18 May 2022

UpdateAudit Policy

12 May 2022

PublicationSustainability assurance under the CSRD

10 May 2022

PublicationAudit Quality Indicators: a global overview of initiatives

5 May 2022

UpdateAudit Policy

13 April 2022

PublicationESG Governance

12 April 2022

EventCSRD: state of play before the final EU negotiations

30 March 2022

UpdateAudit Policy

10 March 2022

NewsWar in Ukraine – responses from the accountancy profession

9 March 2022

NewsEU Corporate Sustainability Due Diligence Directive: a global milestone that will need further clarity

24 February 2022

NewsExecutive directors’ bonuses must be linked with sustainability objectives

16 February 2022

UpdateAudit Policy

8 February 2022

NewsStronger corporate reporting in Europe – solutions by the accountancy profession

2 February 2022

Consultation responseEC’s consultation on corporate reporting – improving its quality and enforcement

2 February 2022

PublicationSupply chain sustainability assessment

28 January 2022

EventBecause Green Recovery Counts

27 January 2022

Consultation responseIAASB’s Exposure Draft on a New Standard for Audits of Less Complex Entities

26 January 2022

UpdateAudit Policy

14 December 2021

PublicationAudit facts: what you need to know on audit, auditors and supervision

22 November 2021

Sign up for our newsletter

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