What constitutes an 'error' in financial statements?

In the context of financial statements, an 'error' is defined as an unintentional misstatement or omission of amounts or disclosures. This can occur due to mistakes in mathematical calculations, misapplication of accounting principles, or oversight in gathering and presenting pertinent information. It emphasizes that the incorrect information is not a result of deliberate actions or misrepresentations. This distinction is crucial for ensuring the integrity and reliability of financial reporting, which must be based on accurate and truthful information.

On the other hand, intentional misrepresentations fall under fraud rather than errors, and disagreements with an auditor's opinion indicate differing views on financial reporting but do not constitute errors themselves. Additionally, subjective interpretations of data may lead to differing presentations in financial statements, but they do not change the factual accuracy of the data presented; thus, they also fall outside the scope of what defines an error.