An insurance company in Asia reported a profit of $100 million for the financial year 2015–16 through the news-dissemination system of the stock exchange where it was listed. Its stock price increased several times as the announced profit was 10 times more than the previous year’s profit. A few days later, the company announced a mistake in the released financial results and stated that the correct profit should be $9.5 million.
Regulatory bodies were asked to investigate if it was a trick used to manipulate stock prices. It was not clear who should be held responsible: the management, the accounting system, or the auditor?
REQUIRED

a. Is this an example of fraudulent financial reporting?

b. What procedures could reduce the occurrence of such “mistakes”?