Uploaded by Emmie Jaygi Roque

Chapter 12- Fraud and Error

Chapter 12 Fraud and error
Differences of fraud and error
Intentional act
Delibrate act
Mathematical mistakes
Make someone believe
Misapplication of accouting
Something that is not true
Misinterpretation of fact
2 types of intentional misstatement
-resulting from fraudualent financial
-resulting from misappropriation of
This misstatement happen in
This mistatements may happen in
the financial staements or the
everyday operations of the
recording papers of an entity.
Such pressure in commiting or
committed more by the
altering the amounts in the fs
employees or clerk for they are
the people who have access to
Marketing- they want to attract
such assets.
more investors by manipulating
This intentional misappropriation,
amounts in the fs showing
even it is relatively small, if it is
healhty and profitable
committed regualary it became
material to the company’s
To reduce earnings, ommiting
such amounts to minimize tax,
And when it happens that
by this the company hold sums
management became aware of
of earnings and did not account
this and do not take action in
such earnings in filing tax at
finding the culprit, they tend to
the commission
conceal the misappropriation by
manipulating records.
This type of misstatement are
often done by higher ups or the
Video lecture 1 Fraud and error
Why people committ fraud?
What motivate someone to commit fraud
Has the access,
Fraudster, justifying itself, underpay or overwork
Responsibilities of management
Take reasonable step
Intalling an effective, accounting system and internal control system
Establish committee
Ensuring has code of conduct
Responsible of auditors
To express an opinion
True and fair view
Audit conducted in accordance with GAAS
Mainatain an attitude of professional skepticism
o Reporting responisbilities
In management, communicate factual finding
User of FS
Conclude that FS has material effect & properly
Duty of confidentiality, auditors must have legal advice
Video lecture 2
Its management responsibility
How long it occuring
How many people are involve
How much is in the fraudulent act
Some company conceal such fraud because of reputation and credibility issue.
Publishing such FS or accounting records signed and approved by the
excecutive can affect their image in a bad way.
Adobe Gothic Std B