Which SAS instructs auditors how to document fraud risk?

The correct choice is SAS 99. This Statement on Auditing Standards specifically addresses the auditor's responsibilities relating to fraud in a financial statement audit. SAS 99 provides a framework for auditors to understand how to document and assess the risk of fraudulent activities. It emphasizes the need for auditors to consider the potential for fraud in their assessments and outlines the procedures that should be followed in documenting this process.

SAS 99 is significant because it incorporates a requirement for auditors to increase their awareness of the potential for fraud during the planning and risk assessment phases of an audit. It helps set out specific steps that auditors should take, such as brainstorming sessions to discuss potential fraud, the assessment of risk factors, and appropriate documentation related to identified fraud risks.

Additionally, while other SAS statements may address various topics related to auditing, none provide the specific guidance on documenting fraud risk as comprehensively as SAS 99 does. Therefore, it serves as a critical reference for auditors seeking to ensure they adequately consider and document the potential for fraud in their audits.