Understanding Fraud
What Is Fraud?
Fraud is an intentional act involving deception that results in a material misstatement of the financial statements or misappropriation of assets. Unlike errors, fraud involves deliberate actions to mislead users of financial information.
Tip
Most CPA exam questions classify fraud as either fraudulent financial reporting or asset misappropriation.
Summary
Fraud differs from error because it involves intentional deception rather than accidental mistakes.