Fraud can be defined as the intentional misrepresentation of financial information in order to gain personal advantage. Fraud involves deception on the financial information in order to have unjust and illegal advantage. Examples of fraud include falsification of records or documents and misappropriation of assets.
Errors on another hand can be defined as unintentional misrepresentation of financial information not necessarily to gain personal advantages. Examples of errors include misapplication of accounting policies and clerical mistakes.
The key distinction between fraud and error is therefore whether the effect on the financial statements is deliberate (fraud) or unintentional (errors). Other differences between fraud and errors may arise in relation to any legal or regulatory reporting requirements. There may be a requirement to report a suspicion of fraud but not errors.