Following several high profile cases of corporate collapse and audit failures, Sir Donald Brydon highlighted the perceived expectation gap between what an auditor can and should do in relation to fraud, and the public’s desire for the auditor to find all such problems.

As a response to this, in May 2021, the Financial Reporting Council (FRC) published revised  ISA (UK) 240 (Updated May 2022) The Auditor’s Responsibilities Relating to Fraud in an Audit of Financial StatementsThe revisions aim to provide clarity about the auditor’s obligations and further guidance.

This is not a fundamental change in the auditor’s responsibilities or approach as the revisions mainly serve to clarify and formalise existing requirements. However, the amendments do introduce several new requirements, particularly around risk assessment.