Which of the following misstatements is most likely to result from fraud rather than error?

Correct answer: B) The sales director instructs staff to date despatch notes for goods despatched on 3 January as 31 December, so that an annual bonus target is met

Explanation

The distinguishing factor between fraud and error is whether the act causing the misstatement was intentional. Deliberately misdating despatch notes to record sales in the wrong period is fraudulent financial reporting, and the bonus target provides an incentive. The transposed figure, the misunderstanding of a standard and the keying mistake are unintentional, so they are errors, even though they still need correcting if material.