Why red flags that suggest material fraud are so hard to spot
Fraud can be somewhat of a grey area, but there are situations that auditors should scrutinise in particular.
Fraud is a complex issue. Misinterpretations are commonplace in terms of both what counts as fraud and at what point auditors can be expected to spot it. As ICAEW’s recent report on fraud and audit highlights, transgressions are not always obvious and the line between error and fraud can be blurred. Still, there are red flags that may indicate material fraud in financial accounts, albeit they are often hard to spot.
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