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Planning

Fraud and error

2.1 Definition

Fraud is an intentional act by one or more individuals among
management, those charged with governance, employees or third
parties, involving the use of deception to obtain an unjust or illegal
advantage.

Fraud can be split into two types:

 Fraudulent financial reporting – deliberately misstating the financial
statements to make the company's performance or position look better/worse
than it actually is.

 Misappropriation – the theft of a company’s assets such as cash or inventory.

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