The Responsibility of the Auditor for Fraud and Error Lab Report

The Responsibility of the Auditor for Fraud and Error - Lab Report ExampleThis physical composition discusses the auditors responsibility for maneuver and error. It studies the link between the objectives of external audit to this responsibility. It draws on applicable auditing standards that provide guidance on the responsibility of the auditor for fraud and error in the financial statements. It excessively discusses the responsibilities of the business entities panel of directors and management. Lastly, it provides some discussions on the higher profiled fraud cases in the past and the effect on the auditing profession of these high profiled cases.The Glossary to the International Standards on Auditing or ISA (p. 19, IFAC, 2010) officially defines fraud as an wise(p) act, committed by a certain individual or certain individuals by victimisation deception to obtain an unjust or illegal advantage that inevitably leads to the misstatement of the financial statements. Error, on the other hand, is defined as an unintentional misstatement in financial statements which whitethorn include omitting a certain centre or a certain disclosure (p. 18, IFAC, 2010). Both fraud and error may lead to financial statements misstatements. Both of them may lead to restatements misstated financial statements. However, what sets the two apart is whether the financial statements misstatement is deliberate or not, with fraud considered more serious (and illegal) than error.Financial statements fraud is done due to a variety of reasons. Some of the reasons may include trying to obtain new credit or more investments creating favorable stock comfort trying to conceal an inability to improve the performance of the company increasing management or the board compensation by showing higher earnings obtaining a promotionwithin the company and privateness improper business transactions (p. 58, Rezaee and Riley, 2010).