Definitions

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Fraud

An intentional act....involving the use of deception to obtain an unjust or illegal advantage

Three main areas of fraud exist:

  • Corruption

  • Misappropriation of assets

  • Financial statement fraud

Error

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

Examples are:

  • A mistake in gathering data from which FS are prepared

  • An incorrect accounting estimate due to an oversight

  • A mistake in applying accounting principles

Irregularity

An intentional misstatement to mislead users

If a material error is identified, but not corrected it becomes an irregularity

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