According to the CPA Canada Handbook,the auditor's responsibility for failure to detect fraud arises

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The auditor's responsibility for failure to detect fraud arises when such failure clearly results from failure to comply with generally accepted auditing standards. In other words, the auditor is responsible for detecting fraud during the audit process to the extent required by professional standards, and failure to do so can result in liability for the auditor. This responsibility exists regardless of the size of the misstatement or whether the examination was specifically designed to detect fraud. The auditor must exercise professional skepticism and maintain an attitude of suspicion throughout the audit process to detect the possibility of fraud.

According to the CPA Canada Handbook,the Auditor's Responsibility for Failure