Auditors too quick to believe clients

The AIU, part of the Financial Reporting Council, also berates firms for failing to act on its previous warnings to improve fraud risk assessments during audits. Such assessments are particularly relevant during the economic downturn given the "increased likelihood of fraud", it says in its 2009/2010 annual report for the year ended 31 March 2010 Of particular concern to the AIU is the failure of some firms to identify fraud related to revenue as posing a "significant" risk, despite the presumption in Auditing Standards that this would normally be the case The AIU report states: "F...