Background

Safe Net is the wealth management division of Security Bank (Security) and provides investment, superannuation, insurance and private wealth solutions to corporate and institutional customers. The following is a list of the auditor's planning file notes in relation to fraud detection for the audit of the Safe Net unit.

1. Ensure all material fraud instances are detected.

2. The auditor is responsible for maintaining professional scepticism throughout the audit, considering the

potential for management override of controls and recognising the fact that audit procedures that are

effective for detecting error may not be effective in detecting fraud.

3. Respond appropriately to fraud or suspected fraud identified during the audit.

4. A discussion among all of the audit firm's staff on how and where the entity's financial statements may

be susceptible to material misstatements due to fraud, including how fraud might occur.

5. Make enquiries of management, and others within the entity as appropriate, to determine whether they

have knowledge of any actual, suspected or alleged fraud affecting the entity.

6. Obtain sufficient appropriate audit evidence to confirm all potential fraud instances have been

uncovered and their impacts considered.

7. Test the appropriateness of journal entries recorded in the general ledger and other adjustments made

in the preparation of the financial statements.

8. Determine whether management has sufficient skills to prevent and detect fraud (e.g. through proof of

attendance at appropriate industry seminars and workshops, or past experience with fraud).

9. Obtain a copy of the client's code of ethics document, and ensure employees have access to it.

10. Evaluate whether the accounting policies selected by the entity may be indicative of fraud.

REQUIRED:

Identify the activities that are part and the activities that are not part of the auditor's responsibilities relating to fraud under ASA 240.