Question

As an aspiring auditor, you have been asked to give a brief on ‘fraud and error’. Your task is to give a clear distinction between the two (2) terms. You have also been asked to explain a Reportable Irregularity according to the Auditing and Profession Act. (22)

Answer 1

Fraud is an deliberate act done by a cunning person to mislead the people about the truth and seriously hurt the intended person or organization.Any illegal acts characterised by deciet , concealment or violation of trust.eg. embezzlement or misappropriation of cash, stealing from company resources, production of deceptive data.

Errors are made unknowingly by anyone who lacks knowledge and or due to oversight on part of an individual which of caught can be corrected by taking appropriate measures to prevent it from happening again.It Amy be defined as unintentional misstatement , it may be material or immaterial.eg typing error, missing out from Excel formula etc.

Reportable irregularity :

Any unlawful acy or ommission committed by any person responsible for management of an entity which -

• Has caused or is likely to cause material or financial loss to the entity or any partner,ember, shareholders,creditor or investor of the entity in respect of his,her or its dealing with entity or
• Is fraudulent or amonts to theft or
• Represent a material breach of fiduciary duty owed by such person to the entity or any partner,member ,shareholder,creditor or investor of the entity under any law applying to entity or the conduct or management thereof.

Thanks