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KARIMON PAIMON Associates
A146920 GAN KOK HOW
A147328 DION LOO HUI NI
A147479 FARAH NABILA BINTI AZMI
A147495 SITI NUR ATIQAH BINTI MOHMAD YUSOP
A147563 EVELYN YONG JING TING
FRAUD AND ERROR (ISA240)
▷When planning and performing audit procedure and evaluating and
reporting the result, the auditor should consider the risk of material
misstatement in the financial statement resulting from fraud and error.
ERROR FRAUD
Unintentional misstatement in Intentional action by
FS management/ employee to use
• A mistake in gathering and deception to obtain illegal
processing data advantages, results to
• Mathematical/ clerical mistake misrepresentation of FS
• Incorrect accounting estimate
• Mistake in application of • Manipulation & falsification of
accounting principle record/document
• Oversight/misinterpretation of • Misappropriation of assets
fact • Omission of transaction
• Misapplication of accounting
policies
Fraud
Fraudulent
Misappropriation
Financial
of Assets
Reporting
Responsibilities of Management
Prevent and detect fraud
Establish and maintain adequate accounting and internal
control system
Responsibilities of Auditors
Conduct of audit in accordance with ISAs
Financial statements are free from material misstatements.
No absolute assurance that material statements are
detected because:
Use of judgement
Use of testing
Inherent Limitations of internal control
Evidence is persuasive but not conclusive in nature
Professional Skepticism
Cash theft
• the stealing of physical cash,
• E.g.: petty cash, from the premises of a company.
Fraudulent disbursements
• company funds being used to make fraudulent payments.
• E.g.: billing schemes, where payments are made to a fictitious
supplier, and payroll schemes, where payments are made to
fictitious employees (often known as ‘ghost employees’).
Inventory frauds
• the theft of inventory from the company.
Misuse of assets
• employees using company assets for their own personal interest.
3. Financial Statement Fraud
Known as fraudulent financial reporting,
Forensic Forensic
Investigation Auditing
2. Perancangan
(Planning the Investigation)
4. Pelaporan (Reporting)
26
2. Perancangan
(Planning the Investigation)
27
3. Pengumpulan Bukti
(Gathering Evidence)