How to distinguish between error and fraud?

The term error refers to an unintentional misstatement occurred in financial statements, including the omission of an amount or disclosure, such as:

• An error occurred in the collection or processing of data on which the financial statements are based on.

• An incorrect accounting estimate occurred due to overlooking or misinterpretation of facts;

• An error in applying accounting policies related to data assessment, recognition, classification, disclosure or description.

Errors may occur in connection with the recognition, assessment, disclosure or description of elements included in financial statements.

The term fraud refers to 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 may involve:

• Manipulation, falsification or alteration of records or documents;

• Inadequate allocation of assets;

• Avoidance or omission of transactions in records or documents;

• Recording of transactions without substance;

• Incorrect application of accounting policies.

Error is a mistake which is done unintentionally by individual.Any misstatement which is done intentionally to deceive other is a fraud.

Thanks for invitation

The term fraud means the willful misrepresentation made with an intention of deceiving others. It is a deliberate mistake committed in the accounts with a view to getting personal gain. In accounting, fraud means two things.

1. Defalcation involving misappropriation of either cash or goods

 2. Fraud manipulation of accounts not involving defalcation

Examples of  defalcation include.

   1. misappropriating the receipt by not recording the same in the cashbook

    2. By destroying the carbon copy or counter foil of the receipt and misappropriating the cash received

    3.by not recording the receipt of sale etc

Errors  an unintentional mistake which can be corrected when found. The auditor can detect the errors by checking the posting into respective ledger accounts.

so difference is unintentional and intentional

Error is done unintentionally while fraud is done intentionally.

Errors are not intentionally done but frauds are intentional.

Mr. Shabbaz Hayder comparison of error and fraud in a simple two word is one of the most effective way and direct to the point. more words can be used such as "honest mistakes and corrupt action" . As far as accounting and financial aspects are concerned he colaborated few details that makes it more covincing than any other explanation. 

Simply, fraud takes place when  an evidence of intent to mislead is found, whereas errors aren’t deliberate.

i agree,with answers of Shahbaz Hayder ....

Fraud is an intentional act carried out by an individual or group of individuals with the aim to deceive third parties while error is an unintentional mistake

Error involves financial or technical mistakes which were done on unintensional basis whereas fraud involves mostly financial unethical and illeagal adjustments performed intensionally.