Fraud
Fraud has a corrosive effect on the trust necessary for
companies to do business. Management is
responsible for running the company and preventing
and detecting fraud. Preventing and detecting fraud
is difficult because fraud is intentionally hidden and
may involve collusion by multiple participants.
Even though audits are properly performed in
accordance with relevant GAAS, they may not detect
material fraud. However, auditors are responsible for
obtaining reasonable assurance that the financial
statements are not materially misstated as a result of
fraud.