Illegal Acts

Direc
  Errors Fraud t Other Laws
effect
 an untentional misstatement of
financial statements,including the
Definition
ommission of an amount or
disclosure.      
  Mistake in gathering or
processing data from which
financial statements are
prepared.
 An incorrect accounting
Examples
estimate arising from
oversight and
misinterpretation
 Mistake in application of  Management fraud
accounting principle Employee fraud    
  The responsibility
of detecting fraud
and error lies with
the management
and those charged
with governance.
The auditor has no
detection
 The responsibility of detecting responsibility.
Detection Responsibility (at
least two) fraud and error lies with the However, the
management and those charged auditor should
with governance. The auditor has maintain an
no detection responsibility. attitude of
However, the auditor should professional
maintain an attitude of skepticism through
professional skepticism out the audit to
throughout the audit to be able detect fraud, if
to detect error, if there is any. there is any.
   
Reporting Responsibility (at
least two)