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

Advantages and disadvantages of internal audit?, Benefits of Internal Audit...

Benefits of Internal Audit are following: It is in-expensive. No charted accounted is needed to audit internally. Faults will be removed before preparing financial stateme

Higher normal risk, Higher  normal risk Several audit assignments invo...

Higher  normal risk Several audit assignments involve high audit risk and usually in any client there will always be at least one high risk area.  Indications that an audit has

Recognize the related parties, Recognize the Related Parties The audit...

Recognize the Related Parties The auditor should review information provided through the management and directors recognize the names of all identified related parties and sho

Ias 28 - audit process, IAS 28 - Audit Process IAS 28 applies in accou...

IAS 28 - Audit Process IAS 28 applies in accounting for investments in associates, except those held through: Venture capital organisations, or Mutual funds,

Assertions about classes, Assertions about classes Assertions about ...

Assertions about classes Assertions about classes of transactions and events for the period under audit : a) Occurrence -events and transactions which have been recorde

How can scope of internal audit help you, Internal audit is an independent ...

Internal audit is an independent assessment function which is recognized by the management of an company for the review of its internal control system as a service to the company.

Introduction to EDP auditing, types of EDP accounting system and impact of ...

types of EDP accounting system and impact of EDP accounting controls

THREATS TO INDEPENDENCE, WHAT ARE THE MAJOR PROBLEMS INVOLVED IN THE USE OF...

WHAT ARE THE MAJOR PROBLEMS INVOLVED IN THE USE OF A PERSONAL COMPUTER BASED PC SYSTEM BY A SMALL COMPANY

Internal controls and process improvement, how do internal controls affect ...

how do internal controls affect or improve the goals of a bussiness firm

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