Fraud and error, Auditing

Assignment Help:

Fraud and Error

ISA 240: the Auditor’s duty to Consider Fraud and Error defines that whenever planning and performing audit procedures, computing and reporting outcomes thereby, the auditor must consider the risk of Material misstatements in the financial statements resultant from fraud or error.

Mis-statements in the financial statements can occur from fraud or error.

The word “error” refers to an unintentional mis-statement in financial statements, involving the omission of a quantity or a disclosure, like the following:

  1. A fault in assembly or processing data from which financial statements are organized.
  2. A wrong accounting estimation occurring from oversight or delusion of facts.
  3. A mistake in the function of accounting principles concerning to measurement, classification, recognition, presentation, or revelation.


The word “fraud” refers to an intentional act by one or more individuals amongst management, those charged with supremacy, employees, or third parties, including the use of deception to acquire an unjust or illegal benefit.

However fraud is a broad legal notion, the auditor is concerned with falsified acts which cause a material misstatement in the financial statements. Misstatement of the financial statements might not be the objective of several frauds. Auditors do not make lawful determinations of whether scam has actually happened. Fraud including one or more members of management or those charged with supremacy is termed to as management fraud;” fraud including only employees of the entity is termed to as “employee fraud.” In either situation, there might be collusion with third parties exterior the entity.

Two kinds of intentional misstatements are applicable to the auditor’s consideration of fraud – misstatements resultant from fraudulent financial reporting and misstatements resultant from misappropriation of possessions.


Related Discussions:- Fraud and error

Techniques of obtaining evidence, Techniques of Obtaining Evidence ISA...

Techniques of Obtaining Evidence ISA 500 mentions them as such: Inspection of documents or records, Inspection of tangible assets, Observation, Inq

What are possible risks, Oversee commission staff to ensure individuals are...

Oversee commission staff to ensure individuals are properly trained and monitored. please provide me with some risks, controls and audit tests for the process above.

Briefing paper on the issues facing established audit firms, Case Study: ...

Case Study: You have commenced work as a graduate auditor with a well established audit firm. The firm has a wide client base, which includes some of the largest companies in t

Transferee liability, Transferee Liability - A person may be held LIABLE fo...

Transferee Liability - A person may be held LIABLE for another taxpayer's delinquent taxes if: 1. The transferee received assets of the transferor-taxpayer; and 2. The transf

Communication with the expert, Communication with the expert If the aud...

Communication with the expert If the auditor intends to use the work of an expert then he must communicate with the expert well in advance to confirm the terms of engagement an

Online exam, online exam in Auditing class. the exam will be about 2 hr. ...

online exam in Auditing class. the exam will be about 2 hr. Thank you

Factors affecting and controlling occupational health, Factors Affecting an...

Factors Affecting and Controlling Occupational Health (i) Walking-Working Surface Workers must work or move on different surfaces while working. Such - surfaces are cha

The concept of audit evidence, The Concept of Audit Evidence Auditing i...

The Concept of Audit Evidence Auditing is an evidence gathering exercise. It is an exercise carried out to confirm the assertions made by the management in carrying out the man

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd