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Audit Risk and Business Risk
We saw in earlier studies that audit risk is often categorized as the product of inherent risk, control risk and detection risk.
Auditors should consider business risk in three ways:
(i) By enquiring into and assessing business risk, thereby gaining an excellent knowledge of the business. This is a basic requirement in all audit engagements.(ii) By helping their clients to recognize, assess and respond to risk – by welcoming it, ignoring it, managing it, eliminating it, developing a recovery plan, insuring against it etc. This can be a lucrative source of fees. They may also help to eliminate or mange risk, which reduces audit risk in the future.(iii) By seeing the connection between audit risk and business risk and the risk of misstatement in the financial statements, which focuses the audit or risks likely to lead to possible misstatement.
Fairness - Auditing The word fair can have the following meanings: on the other hand clear, plain and distinct and on the one impartial, equitable and simple. When fair is
Transferee Liability - A person may be held LIABLE for another taxpayer's delinquent taxes if: 1. The transferee received assets of the transferor-taxpayer; and 2. The transf
Verification Work - Audit Process At the same time the audit process will need verification work as an example: examination of costing records, allocation and verification of
Records kept by AUDITOR of procedures applied, tests performed, the information obtained and pertinent conclusions reached in the course of the AUDIT. (2) Any records developed by
Indications of inapplicability of Going Concern Unfortunately, Insolvency is a development industry as the economy suffers a down turn and consequently for a majority of enter
ILLEGAL ACTS Auditors may uncover criminal offences committed by a client or an employee of the client. This puts them in a difficult place, though the auditor must act careful
Fraudulent financial reporting Involves intentional misstatements or errors of amounts or disclosures in financial statements to mislead financial statement users. Fraudulent f
Q. Walkthroughs for auditor? Walkthroughs provide the auditor with evidence to: 1. Confirm auditor's understanding of the process flow of transactions. 2. Confirm auditor
Audit of Holding Companies and Group Accounts Authoritative documents are as: The Companies Act Cap 486 IAS 27 IAS 28 IAS 31 IFRS 3 ISA 600 r
QUESTION: (a) The auditor should get relevant and reliable audit evidence sufficient to enable him to draw reasonable conclusions therefrom: (i) What do you understand by
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