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Fraud Awareness Audits

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Define fraud and the roles and responsibilities of an Auditor in detecting and reporting fraud. Talk about the impact of accounting fraud. Give an example of fraudulent activity.

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Solution Summary

In this solution a definition of fraud is provided. There is also an explanation of how an auditor detects and reports accounting fraud. Further an example of fraudulent activity is provided.

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Fraud can be defined as "deceit, trickery, sharp practice or breach of confidence perpetuated for profit or to gain some unfair advantage." It may also be defined as a particular instance of deceit or trickery."

An auditor may detect fraud if he/she sees evidence of asset misappropriation. The auditor would also need to perform an analytical review: a review of the accounts that might show unusual or unexpected activity. Other methods for detecting fraud include:

Statistical sampling- where basic documentation of purchasing can be tested to determine its irregularities.
Complaints from a vendor or outsider: Complaints from a customer, supplier or other third can lead ...

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