Identify and Briefly Describe the Two Most Common Types of Fraud

question 17

Essay

Identify and briefly describe the two most common types of fraud that impact financial statements.

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Definitions:

Representation

A statement or action made to induce another party into a contract, which may not necessarily be a strict warranty.

Negligent Failure-To-Warn

A legal claim that occurs when a party fails to appropriately inform others about the known risks or dangers associated with a product or activity, resulting in harm.

Sophisticated Users

Consumers or users who have a high level of expertise and knowledge about a particular product or service.

Ordinary Consumers

Regular or typical individuals who purchase goods and services for personal use.