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
The Tonka Manufacturing Company conducts its annual physical inventory at the end of the calendar year as a result of the auditor's assessment of non-operating internal controls in

Advantages and Disadvantages of Joint Audits The general disadvantages and advantages of joint audits as: Advantages 1. All fees and work are welcome to audit firms. 2. A

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

Types of audits As far we have tended to think in state of the audit of limited companies, and certainly, the emphasis during this text will be on that companies incorporated

Standardization of Working Papers - Auditing The ICPAK guideline states that the needs of standardized working papers may improve the effectiveness along with that they are re

under what circumstances are internal controls inappropriate for auditors to check?

what is the effect of fraud and error on the financial statement.please I want simple answer

Beneficial Ownership and Existence Existence Existence of buildings and Land is not hard to display. You may even be sitting in such building.  Conversely, the audito

The management of a newly incorporated company is unsure as to the need for an audit. Your services have been requested to explain to management the concept of auditing. Requir

How to involve people in audit? Ans) Use audits as opportunities to train others. Ask for a volunteer (who is not an auditor) to walk by the audit process with you as an assista