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Who should be detecting fraud anyway?

As the probe into audit firms across the UK continues, the fresh new face of Grant Thornton, David Dunckley, stated in front of committee members that "we're not looking for fraud". It’s a direct statement and there are no mincing his words, but he continues on to state that the detection of fraud is an expectation gap between what clients think they receive, and what work is actually performed.

I personally admire the directness of David's comments and agree that a financial statement audit only helps show that the accounts are reasonable and free from material misstatement. Furthermore, I agree that there is an expectation gap, and this is something we as auditors are solely accountable for; we should never have let this gap occur.

The statement made by David raises a very good question though. Who is ultimately responsible for the detection of fraud? Certainly, as both an internal auditor and financial statement auditor, consideration to fraud is always given throughout an audit, but never do we actively looked for fraud. But should we be expected to? A Partner once told me that you should never look for fraud as it may not even exist. You cannot find something if it’s not there to begin with.