5.1 - Fraud and Error

Question 1

Define fraud

Answer 1

An intentional act by one or more individuals among management, those charged with governance, employees or third parties, involving the use of deception to obtain an unjust or illegal advantage

Question 2

Define error

Answer 2

An unintentional misstatement in financial statements, including the omission of an amount or a disclosure

Question 3

Why can the financial statements fail to give a true and fair view?

Answer 3

Due to fraud and error

Question 4

What is an auditor’s main fear around fraud?

Answer 4

Fraud that causes a material misstatement in the financial statements