What Is Fraud and Who Is Responsible?
Journal of Forensic Accounting
Research shows that fraudulent activity affecting the financial statements is more prevalent than ever despite the increased attention devoted to the prevention and detection of fraud by companies and professional accountants. Fraud is a critical issue for preparers and users of financial statements, as well as auditors. Each group’s association and involvement with the financial statements is from a slightly different perspective. Even though all individuals in the financial reporting process share the responsibility for the integrity of the financial statements, different perspectives of fraud can and do affect each group’s interpretation of fraudulent activity and responsibility for the prevention and detection of fraud. Accordingly, two questions must be asked: What constitutes fraud, and who is responsible for the detection of fraud? This paper examines the similarities and differences in the definition of fraud, as documented by ten professional organizations, as well as who is responsible for fraud detection.