This document discusses fraud, the types of fraud, and techniques for fraudulent financial reporting. It defines fraud as an intentional deception to obtain an unjust advantage. The two main types of fraud are fraudulent financial reporting and misappropriation of assets. Fraudulent financial reporting involves the manipulation of accounting records or documents to misstate the financial statements, such as inflating sales or expenses. Some common techniques used include misapplying accounting policies, omitting transactions from financial statements, or intentionally misclassifying items.

1. SA-240 Frauds

2. What is Fraud ? Types of Fraud
 Fraud is an intentional act by one or more individual or management or those
chare with governance involve deception use to obtain unjust ore illegal
advantage
 Fraud is broad legal concept but auditor concerned with the fraud which material
misstatement to the financial statement
 Types of Fraud
 Misstatement in Financial Reporting Framework
 Misappropriation of Assets

3. Characteristics of Fraud
 Intentional Fraud : Misstatement in financial Statement arise weather due to fraud
or error there distinguishing factor between the error or fraud whether the
underlying action in the financial statement intentionally or unintentionally
 Broad legal concept : Fraud involves misstatement in the financial statement,
misappropriate of the asset by deflection of cash and misappropriation of goods
 Fraud whether fraudulent financial reporting or misappropriation of asset involves
incentive or pressure to commit a fraud perceive an opportuning and
rationalization of the act

4. Fraudulent Financial Reporting
 Manipulation/Falsification or alteration to the account records or supporting document from the financial statement are
prepared
This type of fraud generally committed
 To avoid incidence of income tax or other tax
 Declaring the dividend when there’s no Sufficient profit
 Holding Dividend when there’s adequate profit
 For receiving higher remuneration where managerial remuneration is payable by reference to the profit
Some method are :
 Inflating or deflating the sales and other income or purchase and expenses
 Failing to adjusting the outstanding liability/prepaid expenses
 or charging the capital revenue as expenses or revenue as an capital expenses
 Misappropriation/Intentional Omission from the financial Statement of transaction or event or significant information
 Intentional Misapplication of accounting polices in recording the amount classification manner or in disclosure

5. Technique which Management override
Controls