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 ...
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.