1. (Learning Objective 1: Define fraud) Define “fraud.” List and briefly discuss the three major components of the “fraud triangle.”
2. (Learning Objective 1: Describe fraud and its impact) Charlene Clyde, an accountant for Otto Brothers Limited, discovers that her supervisor, Bob Lusk, made several errors last year. Overall, the errors overstated the company’s net income by 20%. It is not clear whether the errors were deliberate or accidental. What should Clyde do?