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

Balance sheet and income statement, OBJECTIVES To apply certain st...

OBJECTIVES To apply certain steps in the audit planning process, with emphasis on risk identification and audit response (strategy) thereto. To provide you with the exp

Test clerical accuracy of inventory listing, You have been assigned to carr...

You have been assigned to carry out a stock take in a company. Your Audit Supervisor has given you with an audit programme. As part of a briefing session to your juniors, you a

Why audit of procurement is considered important, The Department of Higher ...

The Department of Higher Education (DoHE) in the Ministry of Education awarded a contract for support of 60 computers to My IT Co. Ltd. and the contract conditions required the del

Timing of tests of control, Timing of Tests of Control - AUDITOR should per...

Timing of Tests of Control - AUDITOR should perform tests of controls over a period of time which is adequate to determine whether, as of the date specified in management's report,

Objectivity - external auditor report, Objectivity - External Auditor Repor...

Objectivity - External Auditor Report Many accounting figures are subjective and contain substantial terms of subjective judgment.  Many more business transactions have financ

Financial reporting, what is the impact of judgemental sampling on the qual...

what is the impact of judgemental sampling on the quality of a financial report

The existence of the auditing profession, Auditing appears to be a worse of...

Auditing appears to be a worse of time considering financial fraud cases in Zimbabwe and world over. Justify the existence of the audit profession and what to be done to improve it

Assertions about account, Assertions about account Assertions about ...

Assertions about account Assertions about account balances at the duration end: a) Existence -assets, equity and liabilities interests exist. b) Obligations and Ri

Memo.2, Ask question #Mini mum 100 words acMr. Howe, a Junior Partner of th...

Ask question #Mini mum 100 words acMr. Howe, a Junior Partner of the CPA firm Dewey, Cheatem, & Howe (DCH), after noting that there is a proposal to limit Auditor liability is ver

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