Regulatory Alerts2022-10-19
Handling of Fraud Risks by Audit Firms in Audited Companies
The Dutch Authority for the Financial Markets (AFM) issues this position paper to address the insufficient development of the audit sector in detecting and following up on fraud risks in statutory audits. The regulator identifies three root causes for these shortcomings: insufficient knowledge and expertise, inadequate auditor mindset and role perception, and obstructive internal organizational cultures. Consequently, the AFM will intensify its supervisory focus on fraud issues by examining audit firms' quality cultures, quality management systems, and the effectiveness of their fraud risk detection procedures.
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