SAS 151, the New Fraud Standard: What It Replaces and When It Applies

SAS No. 151, The Auditor's Responsibilities Relating to Fraud in an Audit of Financial Statements, was approved by the AICPA Auditing Standards Board in August 2026 and issued on October 14, 2026. It supersedes AU-C 240, Consideration of Fraud in a Financial Statement Audit (part of SAS No. 122, as amended), and makes conforming amendments to other SASs. It is effective for audits of financial statements for periods ending on or after December 15, 2028, and the AICPA states that firms may implement it earlier.

A calendar-year client's first audit under SAS 151 is therefore the year ending December 31, 2028. Our guides to fraud risk assessment and journal entry testing cover current practice under AU-C 240.

What does not change

Per the Journal of Accountancy's report on the Board's approval, SAS 151 keeps:

• the principle that management and those charged with governance are primarily responsible for preventing and detecting fraud;
• the definition of fraud; and
• the auditor's overall objective of reasonable assurance that the financial statements are free of material misstatement, whether due to fraud or error.

What it adds

A fraud lens on risk assessment. The auditor applies a fraud perspective when performing risk assessment procedures under AU-C 315, rather than treating fraud as a separate exercise. Align the template work with SAS 145 so it is done once.

Whistleblower and fraud-reporting programs. If the entity has a whistleblower or other fraud-reporting program, the auditor understands it, including how management and those charged with governance handle allegations made through it.

Revenue. The presumption that fraud risks exist in revenue recognition stays. The auditor determines which types of revenue, revenue transactions or relevant assertions give rise to those risks. A single line saying revenue is a presumed fraud risk will not meet that requirement. See revenue recognition audit procedures.

Response to fraud or suspected fraud. The standard adds explicit requirements for what the auditor does when fraud or suspected fraud is identified, and expands the requirements for communicating with management and those charged with governance.

Planning for 2028

• Update the engagement team discussion template for the fraud lens in risk assessment.
• Add a whistleblower or fraud-reporting program inquiry to the entity understanding.
• Draft a firm protocol for what happens when fraud or suspected fraud is identified, including who is told and when.
• Read the amendments to other sections in the standard itself and update the affected templates, including representation letters.

Frequently asked questions

Can we adopt SAS 151 early?

Yes. The AICPA states that firms may implement the standard earlier than the effective date.

Does SAS 151 apply to this year's audits?

No. It applies to audits of financial statements for periods ending on or after December 15, 2028. AU-C 240 governs until then.

Sources

• AICPA, "New Auditing Standard Clarifies and Enhances CPAs' Responsibilities Relating to Fraud in a Financial Statement Audit" (August 2026): https://www.aicpa-cima.com/news/article/new-auditing-standard-clarifies-and-enhances-cpas-responsibilities-relating-to-fraud-in-a-financial-statement-audit
• AICPA, "SAS 151: Clarifying and Enhancing Auditor Responsibilities Relating to Fraud" (October 2026): https://www.aicpa-cima.com/resources/article/sas-151-clarifying-and-enhancing-auditor-responsibilities-relating-to-fraud
• Journal of Accountancy, "ASB approves standard on auditors' responsibilities relating to fraud" (August 2026): https://www.journalofaccountancy.com/news/2026/aug/asb-approves-standard-on-auditors-responsibilities-relating-to-fraud/

CORAA prepares audit files for US CPA firms from client books; the firm reviews and signs. See /us.

AU-C references are to AICPA Professional Standards, paraphrased here; read the standard itself before relying on a requirement. This page is guidance, not professional advice. Report an error