FRAUDULENT FINANCIAL REPORTING AND INDEPENDENT AUDITOR’S RESPONSIBILITY

Fraudulent financial reporting, also called management fraud because of managers’ responsibility over the preparation and presentation of financial statements, is a misrepresentation made deliberately in order to deceive information users. Especially in recent years, there is a common belief that inadequate inspections of independent auditors have also contributed to the danger that large-scale enterprises have been involved in activities which are against the legislation. In addition, reviews carried out by the Public Oversight Authority have revealed that independent auditing firms and auditors have significant deficiencies in fulfilling their responsibilities for fraud. The main purpose of the study is to assess the responsibilities of the auditors for fraud and other infringements of rules in the audit of financial statements within the framework of Turkish Auditing Standard 240 and Ethical Standard for Independent Auditors