Fraud and error, Auditing

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.

Posted Date: 12/3/2012 5:21:08 AM | Location : United States







Related Discussions:- Fraud and error, Assignment Help, Ask Question on Fraud and error, Get Answer, Expert's Help, Fraud and error Discussions

Write discussion on Fraud and error
Your posts are moderated
Related Questions
online exam in Auditing class. the exam will be about 2 hr. Thank you

Banks Features (a) Profit and loss account: When looking at a bank's profit and loss account the accountant should seek to discover what proportions of the bank's profits

In performing a test of controls for sales order approvals, the CPAs stipulate a tolerable deviation rate of 8 percent with a risk of assessing control risk too low of 5 percent. T

Control Problems in Charities 1. Door to door collections : Volunteers should be mattered along with numbered boxes, the boxes should be sealed, and the boxes should be

Disclosure and Presentation - Audit Process IAS 16 provides exclusive disclosure requirements. Fixed assets should be split into appropriate classes and the following shoul

what a group auditing and holding campanies in details with exmple propurly

IAS 40 Investment Properties Audit work common to all kinds of land and building will be used to establish ownership, existence and price. IAS 40 requires such companies may a

Sufficiency - Sources of evidence The audit evidence should in total enable the auditor to form an opinion on the financial statements.  Sufficiency is a measure of evidence o

What are the strength of Stock transfer note