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For each of the following situations, describe how risk of material misstatement should be assessed and what effect the assessment will have on detection risk.
(i) Johnson is a fast-growing trucking company. The company is publicly held, but Ivan Johnson and his sons control 55% of the shares. Mr Johnson is Chairman of the Board and Chief Executive Officer (CEO). He personally makes all major decisions with little consultation with the Board of Directors. Most of the directors, however, are either members of the Johnson family or long-standing friends. The board basically rubber-stamps Mr Johnson's decisions.
(ii) The Focus Bank has been your client for the past two years. During that period, you have had numerous arguments with the president and the controller over a number of accounting issues. The major issue is related to the bank's reserves for loan losses and the value of collateral. Your prior audits have indicated that a significant adjustment is required each year to the loan loss reserves.
Amortization and Impairment Amortization - capitalized costs would be amortized to reflect the pattern whether the related economic benefits are identified. Once commercial
Why is studying Auditing different from studying other accounting topics?
With reference to the case study business, plan an audit. You should make specific reference in your plan to: Scope of the audit Materiality Risk factors including fra
The modern integrated audit approach combines elements of various traditional audit areas having financial, operational, and information technology.
Contingencies and Provisions (i) Receive the client's schedule of provisions and seek and contingencies supporting documentation in the form of legal opinions, correspondence
You are just appointed as the Trainee Accountant of the Compaq Computing Sdn Bhd - the newly established company. The manager is facing difficulties in maintaining the manual accou
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the availability of audit evidence is necessary but not sufficient condition for absolute reliance on the figure presented for audit
In performing a test of controls for sales order approvals, the CPAs stipulate a tolerable deviation rate of 8 percent with a risk of assessing control risk too low of 5 percent. T
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