FRAUD AND ERROR

International Standard

SYNTHESIS

This standard defines the concepts of fraud, the responsibility of prevention and
and it indicates that the responsibility for detecting fraud falls on the
the prevention of them falls on the administration that must implement and
Own management. The auditor must plan to maintain effective internal controls;
audit in such a way that there is at least one, the auditor is not and cannot be
reasonable possibility of detect responsible for fraud prevention or
material distortions arising from the error, although the fact that the audit
fraud or error. This standard suggests practices that can be useful annually.
the procedures that must be followed to prevent the occurrence of such events.
auditor when he detects signs of
existence of fraud or error, as well as when planning the exam, the auditor must
Aspects related to the withdrawal of commitment assess the risk of material distortion
of auditing. that fraud or error can produce in the
financial statements, as it is in the
When planning and applying the obligation procedures of to inquire before the
audit and when evaluating and reporting on the management regarding the existence of
results, the auditor must consider the irregular facts that have occurred
risk of material misstatement in the uncovered states. Based on this, the auditor
financials produced by fraud or must design procedures that
error. offer the certainty of being able to detect
the distortions produced by fraud or
The concept of 'fraud' refers to the act of error, which can have an effect.
intentional, on the part of one or more material in the set of states
individuals from the administration and finance area.
personal or third parties, which produces a
distortion in the financial statements, there is the inevitable risk of being unable to
which may involve: the manipulation or detecting material distortions in the
forgery of documents, the use of financial statements, even when the
Misappropriation of resources, the suppression or audit has been properly planned.
omission of the effects of transactions The risk of non-detection is greater,
in the records and the misuse when it comes from a fraud that
of the accounting policies. involves the presence of acts
preconceived in order to hide it;
The term 'error' is consequently referred to, therefore it is accepted that the auditor
to the unintentional act that produces an acceptance of the statements they receive
distortion in the financial statements, they are truthful and that the records and
which can be manifested in the incorrectness of documents that are delivered for your
Mathematics or procedural in the records, the exams are authentic.
omission or misinterpretation of
facts and the improper application of the respective appendix describe the
accounting policies. examples of conditions or facts that
increase the risk of fraud or error,
from the corresponding approach The improper application of policies
Accounting NA.

Likewise, it includes the comments from 4. The term "error" refers to the act not
the Statement of Auditing Standards intentional that produces a distortion
No.53-SAS/53, around the topic 'errors and' in the financial statements. The error
"irregularities," issued by the Institute it can manifest as:
American Society of Certified Public Accountants

(AICPA); as well as additional notes Mathematical or procedural error in

about detection procedures the substantive records or in the data
frauds and errors. accounted for.
Omission or misinterpretation of
In the area of 'Government Auditing' there facts.
they comment on the audit standards that Improper application of the policies of
they have approved on this subject accounting.
INTOSAI, the General Comptroller of the
Republic of Peru (CGR) and the Office of Administrative Accountability
the General Accounting Office of the United States
from North America (GAO). 5. The responsibility of prevention and
detection of frauds and errors falls on
Introduction the administration what must
implement y to maintain
1. The purpose of this Standard permanently operational systems
International Auditing Standards (ISA) is of accounting and internal control
establish guidelines and provide appropriate. Such systems reduce
orientation regarding a the but they do not eliminate the possibilities of
auditor's responsibility of fraud or error.
consider the existence of fraud or
error in the audit of statements Auditor's responsibility
financial.
2. When planning and implementing the procedures 6. The auditor is not and cannot be
of auditing and when evaluating and reporting responsible for fraud prevention
regarding the results, the auditor must or error. However, the fact that
consider the risk of distortion the audit is conducted annually
material in the financial statements can serve as a brake against fraud
produced by a fraud or error. and mistakes.
3. The term 'fraud' refers to the act
intentional, on the part of one or more Risk Assessment
individuals from the administration area,
personal or third parties, which produces a 7. When planning the exam, the auditor must
distortion in the financial statements, The evaluate the risk of material misstatement
fraud may involve: that fraud or error can produce
in the financial statements and must
The manipulation, forgery or inquire with the administration if
alteration of records or documents. there are significant frauds or errors
The embezzlement (misuse) of that have been discovered.
resources. 8. In addition to the weaknesses in the design
The suppression or omission of effects of the accounting systems and
of the transactions in the records or internal control and the non-compliance of
documents. certain controls, the conditions
The registration of transactions without or facts that increase the risk of
sustentation. fraud or error include:
 detect the distortions produced by
questioning about integrity or fraud or error that have an effect
competence of the administration. material in the set of states
unusual internal or external pressures financial
about the entity. 10. Consequently, the auditor seeks the
unusual transactions. sufficient audit evidence and
problems obtaining evidence of competent to ensure you that it has not been
sufficient and competent audit. produced a fraud or error that has
material effect in the states
The appendix to this Standard presents financial or what, if having been
examples of the mentioned conditions produced, the effect of fraud is
or facts. adequately reflected in the statements
financial or the error has been corrected.
Detection The probability of detecting errors is,
generally, greater than that of detecting
9. Based on your risk assessment the frauds, since the fraud goes
auditor must design procedures for commonly accompanied by acts
audit that they offer you a specifically conceived for
reasonable certainty of being able hide its existence.

a practical example of evaluation

erroneous figures and their cumulative effects
SAS-53-AICPA: RESPONSIBILITY in the financial statements; which may
OF THE AUDITOR TO DETECT AND see in the corresponding annex.
REPORT ERRORS AND
IRREGULARITIES
Due to the inherent limitations of the
audit there is an inevitable risk that
When developing an audit plan the the material distortions in the states
the auditor must consider the factors that financial for a fraud, and to a lesser extent
they influence the audit risk, being extension, due to an error, cannot be
the main ones: detected. The subsequent discovery of
these distortions produced by a
Managerial characteristics. fraud or existing error during the period
Characteristics of operations and of the Covered by the ruling, it does not indicate that the
industry. the auditor has not adhered to the principles
Characteristics of the work. basics and essential procedures of
audit. That the auditor has observed or
The development of these factors can not these principles and procedures, it
will determine the appropriateness of the
to be found in the attached annex to the
present NIA. procedures that have been applied in the
circumstances and the congruence between the
report and the results of those
Similarly, comments are made. procedures.
additional information about the mechanisms of
detection of possible frauds and errors and Inherent limitations of the audit
 incorrect or to hide them, or by suppressing
12. The audit is subject to risk information related to the
inevitable not to be able to detect all transactions.
the material distortions in the
financial statements, even when there are procedures to follow when there are
is properly planned and practiced signs of the existence of a fraud or
in accordance with the ISA. error
13. The risk of non-detection of a
material distortion is greater when 15. If the application of the
this comes from a fraud that when designed audit procedures
comes from a mistake, because of the fraud according to the risk assessment,
commonly involves acts indicate the possible existence of a
conceived to hide it, like the fraud or error, the auditor must
colusión, falsificación, deliberada consider the potential effect on the
omission of transaction recording, or financial statements. If the auditor
intentional evasions made to consider that the alleged fraud or error
auditor. Unless the audit shows it can have a material effect on the
evidence to the contrary, it is admitted that the financial statements, must be modified
auditor accepts that the statements appropriately their procedures or
What they receive is true and that the apply additional procedures.
records and documents that are subject to 16. The scope of the procedures
delivered for your exam are modified or of the procedures
authentic. Sin embargo of additional ones depend on the criteria of the
conformity with the NIA about auditor regarding:
Objective and basic principles that
they govern the audit of statements a. the types of alleged fraud and error;
financieros”, el auditor debe planear y b. la posibilidad de su ocurrencia, y
take your exam with an attitude of c. the possibility that a certain
professional skepticism, taking into type of fraud or error produces a
consideration that the audit could material in the financial statements
reveal conditions or facts that
allow to presume the existence of a Save unless the circumstances indicate
fraud or error. clearly the opposite, the auditor must not
14. While the existence of systems to assume a case of fraud or error
effective accounting and internal control should not be an isolated fact. If they are
reduce the probability of distortions necessary should modify the nature,
in the financial statements due to opportunity y scope of sus
There will always be fraud or error in substantive procedures.
risk that internal controls do not 17. The application of their procedures
function as they were designed. modified or additional allows,
Furthermore, an accounting system and generally the auditor confirms or
internal control may be ineffective to dispel their presumption of fraud or error.
against a fraud involving collusion If the results of your procedures
among the employees or against fraud Do not dispel the presumption, the auditor.
carried out by the administration. must discuss the administrative matter and
Certain levels of management determine if the fact has been
they can be in a position that the appropriately reflected or corrected
allow to pass over the in the financial statements. Must
controls that prevent fraud also consider the possible impact
similar to other employees; by the ruling.
example, ordering his subordinates 18. The auditor must consider the
to register transactions in form implications of fraud or error
 significant in other aspects of the
audit, particularly regarding the users of the opinion
the reliability of the statements
of the administration. In this regard, the 21. If the auditor concludes that the fraud
the auditor must reconsider the evaluation the error has a material effect on the
of the risk and the validity of the financial statements and has not been
manifestations of administration in appropriately reflected or corrected
in case of fraud or error not having in the financial statements, the auditor
have been detected by the controls must express an opinion with
interns or have not been included in reservation or a dissenting opinion.
saying manifestations. At 22. If the entity does not allow...
implications of each particular case the auditor obtains sufficient evidence and
the fraud or error detected by the competent to evaluate whether it has
auditor will depend on the relationship between has occurred or is likely to occur a
the acts of commission and concealment, if fraud or error that can occur in a
the would have been, and the procedures of material effect in the states
specific controls and the level of the financial, must express a
administration o del personal opinion with reservation or an abstention
involved. of opinion due to a limitation on
scope of the exam.
Report on fraud and error 23. If the auditor cannot determine whether
the fraud or error has occurred or not, in
To the administration reason for the limitations imposed by
the circumstances but not imposed
19. The auditor must, as soon as for the entity, it must consider the
it's possible, to communicate the a effect on its ruling.
administration your concern:
To the regulatory authorities or
a. it is assumed that there may be fraud, administrative
even if the potential effect of this on
the financial statements are immaterial; or 24. The duty professional of
b. if it is detected that there truly exists a confidentiality prevents the auditor
fraud or material error report of fraud or error to third parties, in
general. However, in certain
20. When determining which person or circumstances, entity such professional duty is
appropriate for the entity to report on the disregarded by the regulations, the
occurrence of fraud or error laws or the courts (in some
important, possible or real, the auditor countries, for example, it is required that the
must to consider all the auditor report of fraud or error in
circumstances. Regarding the fraud, the financial institutions,
the auditor will evaluate the possibility of respective supervising authorities).
profit from top management. In such circumstances, the auditor
In most cases that I detected may require legal advice and have
a fraud will be appropriate to report it give due consideration to your
subject at a structural level professional responsibility towards the
organizational of the entity that has public interest.
superior responsibility at the level of the
presumably persons involved.Removal of the Audit Commitment
When I have doubts about the
final responsible parties to inform, 25. The auditor may decide that it must
the auditor will seek legal advice to withdraw from the commitment if the entity
determine the procedures to follow. does not take, regarding the fraud, the
 corrective action that the auditor accept the appointment. The degree to which
consider necessary in the the current auditor can discuss the
circumstances, even when the fraud does not client matters with the auditor
sea material for the states proposed as a successor, it will depend on
financial. Among the factors that the authorization obtained from the client
can influence the auditor's decision and/or legal requirements
it is said that the one involved is applicable ethics in each country to
superior authority of the entity, which regarding. If the aforementioned existed
it can affect the reliability of the reason or other matters that need to be
manifestations of administration and communications, the current auditor, within
affect the auditor's decision of of legal and ethical limitations,
continue their relationship with the entity. If including as appropriate, the permission
make this decision, the auditor must of the client, will communicate the details of
seek legal advice. the matters in reference and will discuss
26. As established by the 'Code of freely with the proposed auditor
Public Accountant's Ethics issued as a successor all aspects that
by the International Federation of may affect the designation. If the
Accountants -IFAC", when the auditor client denies their authorization for
proposed as successor auditor discuss the mentioned matters, this
consult the current auditor, they must the fact must be communicated by the
to inform you if there is any reason proposed auditor as successor.
a professional for which it should not

GOVERNMENT AUDIT

Public sector perspectives according to frauds, the use of "public funds"

IAPC-IFAC tends to impose a higher level on the
fraud topics, and the auditor can
It must be taken into account that the verse required to respond to the
nature and scope of the audit of "expectations" of the audience regarding
the public sector may be affected to the detection of frauds. It also has
by the legislation, regulations, what to observe oneself what the
ordinances y provisions responsibilities of information
ministerial related to the may be subject to provisions
detection of frauds or errors. These specific to the audit mandate or
requirements can affect the of the relevant laws and regulations.
auditor's ability to apply his/her
criterion. In addition to the Fraud and error according to the standards of
responsibilities formally INTOSAI audit
assigned regarding the detection of
Procedures standards in the related to unlawful acts, so that
public auditing. do not interfere in possible
legal procedures.
When verifying compliance with the laws
and regulations the auditor must design Fraud and error according to the standards of
review actions that offer the government audit of the
reasonable assurance that they are detected CGRE Special Report (NAGU
errors, irregularities or unlawful acts 4.50
What they could to reverberate
substantially about the values that when executing the work of
are included in the financial statements. audit shows evidence of signs
reasonable grounds for committing a crime, in
The regularity audit (financial) caution of the interests of the State, the
constitutes an essential aspect of the auditor, without prejudice to continuity
public oversight, because one of of the respective exam, must issue with
the objectives pursued are that of the speed of the case, a report
to safeguard the integrity and validity of Special, with the respective support
budget and public accounts. In technical and legal, so that the
by virtue of this, both the Parliament and relevant actions immediately
the recipient authorities of the in the relevant instances.
audit reports are in
conditions to ascertain with certainty the The application of this norm will allow
magnitude y evolution of the auditor based on his judgment
financial obligations of the State. professional and in observance of the
applicable legal standards, exercise your
For this purpose, it is necessary that the Entities work in cases of evidence, of
Regulatory authorities
Superiors (EFS) reasonable indications of commission of
proceed to examine the accounts and the crimes, during the development of your
financial statements of the administration I work in the audited entity.
in order to ensure that the
operations have been properly The corresponding instance will be
contracted, ordered, settled and Prosecutor's Office, in the case that the audit
registered concluding carried out by the General Comptroller
ordinarily with an 'approval' of the Republic; the Prosecutor's Offices, and/or
in the event of not detecting irregularity. Attorney General's
asdcrita
Office to sector
respective, when the exams are
Similarly in the audits of carried out by the audit bodies
scope broad it is proposedthe internal conformants of the System and
convenience to evaluate the Designated Audit Firms.
compliance with laws and regulations
current, for which the auditor On the same date of the initiation of the
the government is required to design procedures at the Attorney General's Office and/or Public Prosecutor's Office,
the audit in such a way that it offers a as appropriate, the mentioned bodies
reasonable assurance that they will be detected of auditing and the Societies of
illegal acts that could affect their Audit, they will send a copy of
results. special report to the Comptroller
In general, in the auditor's judgment, to the holder
In these cases, without restricting the of the entity, as long as the latter
independence of the EFS, the auditor is not included in the
must exercise due diligence and reasonable indications of commission of
professional prudence in disseminating the crime.
audit actions and procedures
The issuance of the special report, no
exempt the auditor from his obligation to These concepts are managed
recommend immediate measures, in likewise within the framework of the audits
caution in the recovery of of broad scope. In these regulations, they
state heritage. it establishes that the definition of abuse is
different from that of illicit acts and others
In the presence of the special report, there types of legal breach. When
will basically take into account the abuse occurs, it is not violated
structure of the report of no law, regulation, provision
government audit. contract or agreement; what happens
Is the hosting of a program
Fraud and error according to the standards of governmental no satisfies the
government audit of the GAO society's expectations regarding what
it refers to a prudent behavior.
Errors, irregularities, and acts
illicit However, such rules accept
that the determination of abuse is
The auditor must plan the audit to quite subjective, so I don't know
to have reasonable assurance that it will be wait for the auditor to provide a
possible discover irregularities reasonable assurance that it is feasible
significant in the financial statements detect abuse.
examined
Auditors must report on the
When referring to the topics of errors, significant cases of non-compliance
irregularities and illegal acts are required detected, in order to offer the reader an
that auditors must plan their basis for evaluating frequency and
activities to ensure the security of consequences of tales
what will be possible to detect such behaviors.
situations. In this sense,
we understand that the main purpose Under certain circumstances the
of a government audit is not auditors are responsible for reporting
to detect frauds or irregularities, but about illegal acts directly to the
rather prevent them, since it is the external stakeholders of the entity
own administration of the entity audited. For hello the laws,
public who has the responsibility regulations or policies require that
to avoid them. these report quickly about
the signs of certain types of acts
Tales norms they need what illicit activities they find, in order to be
"irregularity" is that error or omission delivered to the auditing entities
intentional in the presentation of figures of research that corresponds.
o revelations in the states
financial. It also defines that the Examples of conditions or facts that
the term non-compliance has a increase the risk of fraud or
broader sense than illegal act that error
it is the violation of laws or others
legal provisions that have a Questioning of integrity or
significant direct or indirect effect administrative competence
in the determination of the amounts of
the financial statements, but also The administration is dominated by
involves transgressions a the a person (or a small group) and
stipulations of contracts or there is no meeting or committee of
agreements. effective supervision.
 There is a corporate structure
complex where the complexity does not Unusual transactions
seems to be justified.
Corrective measures are not taken in Transactions unusual,
the important weaknesses of especially near the end of the year,
internal control, in what such measures that have an important effect
corrective actions are feasible. about the profits.
There is a high turnover rate of Transactions o treatments
personal basic financial y complex countables
accountable Transactions with related parties
There is an important and prolonged Payments for services (for example, to
staff shortage in the lawyers, consultants or agents that
accounting department seem excessive in relation to
There are frequent changes of the services received.
auditors or legal advisors
Problems in obtaining evidence from
Unusual internal pressures o sufficient and competent audit
externals
Inadequate records, for example,
The sector is in decline. files incomplete adjustments
and bankruptcies are increasing excessive in the books and accounts,
There is working capital unrecorded transactions
inadequate due to the decline according to the procedures
of the profits or to an expansion normal and out of the accounts of
too fast. balance control.
The quality of earnings is Inadequate support for the
deteriorates for example for transactions, such as, the lack of
increase in risk in sales authorization appropriate
on credit, due to changes in the supporting documentation no
commercial practices or by the available y alteration of
selection of accounting policies documents (any of these
alternatives taken to improve the sustaining problems assumes
income. a greater importance as it is
The entity needs to obtain a relate with transactions
trend ascending of the significant or unusual).
utilities to support the price of An excessive number of differences
market for its shares for reasons among the accounting records and the
from a public offer, for reasons confirmations of third parties,
from an acquisition, etc. contradictory audit evidence
The entity has an investment and inexplicable changes in the
important in an activity or line operation indices.
of products in which a Evasive or unreasonable responses
accelerated change. of the administration a the
The entity depends heavily on auditor inquiries.
one or a few products or
clients. Among the factors inherent to a
There is financial pressure on the information systems environment
senior management. SIC that relate to the
There is pressure on the staff. conditions and facts described are
accountant to finalize the financial statements includes:
financial in a period of time
unusually short.
 The impossibility of extract
file information of
computation due to lack or Managerial characteristics:
depreciation of support One person controls the
the records or programs. managerial decisions regarding
Large number of changes in the operations and finances.
programs that are not documented, The managerial attitude towards
they approve nor test. financial information is demonstrated
Inadequate general reconciliation unduly aggressive.
between the transactions Rotation managerial high (en
computerized and databases in particular, the accounting staff of
of the accounts. high level).
Management assigns importance
Annex due to compliance with the
profit projections.
SAS-53-AICPA: Responsibility of In the business community, the
Auditor to detect and report management is not enjoying good
Errors and irregularities reputation.

When developing an audit plan, the Characteristics of operations and of the

the auditor must consider the factors industry
that influence the audit risk,
related to several or all of the The profitability of the entity in
account balances and acquire a relationship to your industry is insufficient
understanding of the structure of the consistent.
internal control. These matters are usually The sensitivity of the results of
to have effects that extend to the operations a the factors
states financial taken in economic factors are high (inflation, rate of
set, and they also influence, in the interest, unemployment, etc.
auditor's consideration of the risk to The pace of change of the entity in
account balance level or class of the industry is accelerated.
operation. The direction of change in the
the industry of the entity is decreasing,
Consideration of audit risk due to a many failures
at the level of financial statements business
The organization is decentralized.
During the planning, it must be without proper supervision
evaluate the risk of the statements Internal matters are evident or
incorrect important. The externals that raise many doubts
understanding by the auditor of regarding the capacity of the
that the internal control structure, entity to continue as a business in
will increase or mitigate your concern March No. 59. 'Consideration of
for the risk of those statements. auditor of the capacity of a
entity to continue as a business
The factors that are considered for in progress.
to assess the risk, the following should be considered
in combination to formulate a judgment Work characteristics
general; the presence of some Many aspects are presented
isolated factors not necessarily contentious or difficult accounts
would indicate greater risk. They will be able to If present important
consider factors of nature operations or balances, difficult to
those listed below: audit
 Important and unusual ones are presented resulting in a statement
operations with related parties important incorrect in the states
not in the normal course of business. financial.
Importance of nature, cause
(if you know it) the number of Communication regarding errors or
known incorrect statements irregularities
and probable, detected in the So that the internal audit committee
audit of the financial statements make the necessary judgments about it
from the previous exercise. informed by the auditor to comply
It is a new client without your responsibility to oversee the
no audit history accounting, the auditor must ensure
previous no himself
obtains the that the audit committee be
sufficient information from the auditor appropriately informed about
predecessor. any irregularity that the auditor
Frequency or importance of the discover during the audit, except if
difficult audit operations that It is not important. For example, a
they affect the balance or the class. minor embezzlement by an employee of
Nature, cause, and number of low level in the organization, can
incorrect statements, known to consider oneself unimportant. However
and likely, detected in the balance or irregularities that are not important
class of the previous audit. individually, they can be reported
Susceptibility of the assets to the audit committee as a whole, and
related to poor management the auditor can arrive at a
Training and experience of understanding with the committee of
staff assigned to process the audit, on the nature and amount
data that affects the balance or class. of irregularities subject to reporting.
complexity of the calculations that
affect the balance or class Responsibilities in others
circumstances
Professional Skepticism This declaration describe the
auditor responsibilities of
A financial statements audit detect y report errors e
carried out in accordance with standards of irregularities in an audit of
audit generally accepted, financial statements, prepared from
must be planned and carried out in agreement with auditing standards
based on an attitude of skepticism generally accepted. In others
professional. The auditor neither assumes that the commitments, the responsibilities of
management is dishonest nor does it imply its audits can be more extensive or more
unquestionable honesty. By the restricted, depending on the
on the contrary, the auditor recognizes that the terms of commitment.
observed conditions and the material
evidence obtained, including the Concealment
information from previous audits,
it must be evaluated objectively for Concealment is any attempt to
determine if the financial statements reduce a possibility of detection of
they are free from any statement irregularity. Normally the
important incorrect. hiding requires manipulation of
accounting or records of
The integrity managerial magazine supporting documents to cover the
importance, because management can made of the records of
to force their subordinates to register accounting or supporting documents
operations and hiding information, they do not agree with the
circumstances. The concealment can of auditing, both tests of
to be skillful and complex or clumsy and limited. compliance as nouns,
The auditor's ability to detect they support those risk assessments.
a concealed irregularity, depends on When the evidence does not support them, it is
his ability of frequency and range possible that we have to carry out
of manipulation, and the relative size of additional substantive procedures.
the manipulated figures.
If we discover that many are left
Signatures and documents can be forged. errors in the accounting records or in
enter or create authenticity signals. the financial statements, we must
change our evaluations to 'high'
The conclusion may result in of inherent risk and internal control
counterfeit confirmations or others for the relevant statements y
evidence of validity. Likewise, consider our procedures
unrecorded operations normally nouns based on what they are
are harder to detect than the errors occurring that must be
hiding through manipulation of quantified (either by the client or
registered operations. for ourselves).

Structure of Internal Control These errors cause a difference.

The lack of control procedures of auditing. A difference of
could allow an error to occur or an audit exists when we do not agree
irregularity repeatedly resulting with the amount, the classification,
a material quantity. However, the presentation or disclosure of parties or
the auditor may not detect an error or totals in the financial statements. Such
irregularity resulting from a failure differences must be summarized
occasional of a procedure of systematically so that we can
specific control. evaluate their effects on the states
financial if they remain unadjusted.
The irregularities they can to be The differences that involve amounts
carried out or concealed at one level of the or the classification of items must be
management. This type of irregularity in accumulated, as it progresses the
In general, it is more difficult to detect. audit, in a Summary of
Differences in Audit that distinguish
Examples of Procedures for those differences that affect the
Fraud and Error Detection net income and assets of those who
only affect the classifications of
Fraud and Error Detection accounts.

Based on usual practices of 1. Known error. There are differences in

The audit is indicated below audit that includes amounts of
important concepts and examples about reliably determined errors,
procedures to detect possible for example:
frauds and errors:
Mathematical errors (sums, price
In the design of the audit program incorrect of a game of
the procedures are selected from inventory
audit to achieve an appropriate level Omissions (an unrecorded liability)
detection risk, risk-based on Errors in classifying or recording balances
our risk assessments or transactions (register a purchase
inherent and internal control. Therefore of fixed asset in the wrong account
the evidence of our procedures or for the incorrect amount).
2. Most probable error, the differences
audit samples are for
statistics and non-statistics, the
best estimates of the total amount
the error is based on the mistakes
specific.
3. Differences in audit not
adjusted from previous periods that
they affect the financial statements
current audit differences
not adjusted in previous years that
they affect the initial net asset and/or the
current year utilities must be
considered the evaluate the
importance relative of the
differences in the audit of the year
current. The differences of
unadjusted audits in years
previous affect the states
current year financials of
various ways and, consequently,
should be considered. These include:

Errors that are "invested in the year

current and have a similar effect
about the Statement of Earnings and
Losses from the previous year, but in the
opposite sense, and they have no
effect on the Balance Sheet of
current year. An example is a
cut error when registering a sale.
Errors what him they do
consistently every year and that
they have a more or less effect
constant about the Balance Sheet and
little or no effect on the State
On Gains and Losses. An example
it is a consistent overestimation of
the provision for accounts receivable
doubtful for approximately the
same amount.
Errors that can add a new
error in the gain or loss of
year current (Example : the
overestimation of a provision for
inventory obsolescence in the year
previous and the underestimation in the
Balance (Example: The record of
depreciation on fixed assets over
the estimated lives considered
too long).