Substantive Differentiation of the Concepts of Financial Error, Irregularity, Material Misstatement, and Fraud in the Activities of Budgetary Organizations

This article examines the substantive distinctions among financial error, irregularity, material misstatement and fraud in the activities of budget organisations on the basis of international public-sector auditing standards and research on the detection of distortions and manipulations in financial reporting. The study demonstrates that error is characterised by the absence of intent, fraud is linked to intent and concealment, while material misstatement is determined by its capacity to influence user decisions. The notion of irregularity is interpreted as non-compliance with budgetary, accounting, reporting and internal control requirements; it does not automatically imply fraud, but in some cases may evolve into material misstatement or a fraudulent scheme. As a result, the article proposes an authorial classification of distinguishing criteria for these four concepts and their application in the internal audit of budget organisations.