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Fraud Awareness Audits

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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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 ...

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.