Which statement best distinguishes fraud from error in an audit?
Correct answer: A. Fraud involves an intentional act or omission
- A. Fraud involves an intentional act or omission
- B. Error always causes a material misstatement
- C. Fraud affects only cash transactions
- D. Error is committed only by senior management
Explanation
Fraud involves deliberate deception or concealment, while error results from an unintentional mistake or omission. Either fraud or error may produce a material misstatement.
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About Auditing
Auditing examines accounting records and financial statements to determine whether they present a reliable and fairly stated position. The subject covers audit objectives, internal controls, audit evidence, materiality, vouching, verification, working papers, auditor independence, audit reports, and the distinction between an audit and accounting or investigation.
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