Page 119 - Auditinf Electronic System

Difficulty of Harder to detect Easier to detect
detection
Results in Misstatements that is Result in misstatement
Resulting always Material (even if in little that can be material or
Misstatements
monetary value) immaterial.

Examples examples of fraud are: examples of errors are:
▪ Falsifying expenses ▪ a mistake in

(recording fake expenses) extending price

using forged bills to conceal times quantity on

cash embezzlements sales invoice
▪ Conceal recording companies ▪ overlooking older

liabilities to show better raw materials in

financial positions determining the

lower of cost or

market for

inventory.

Third: Types of fraud
Fraud consists of two Main types

Misappropriation of assets Fraudulent financial reporting

▪ called employee fraud, ▪ called management fraud

▪ is fraud that involves theft of an entity’s ▪ is an intentional misstatement or
assets by employees and others internal omission of amounts or disclosures
to the organization with the intent to deceive users.

▪ An example of misappropriation of ▪ An example of fraudulent financial
assets is a clerk taking cash at the time reporting is the intentional
a sale is made and not entering the sale overstatement of sales near the
in the cash register. balance sheet date to increase
reported earnings.

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‫جميع الحقوق محفوظة ـ الإعتداء على حق المؤلف بالنسخ أو الطباعة يعرض فاعله للمسائلة القانونية‬