Audit Fee

The idea of “risk” is used in many fields and industries. There has been large efforts made towards the understanding of risk. Since, risk varies so much depending on the field of study, the need for learning about it is warranted. As can be imagined, the importance of risk in a market economy is crucial. In the 1990s, JP Morgan made the Value at Risk (VaR) a central component of its work efforts (Cecilia-Nicoleta, Anne-Marie, & Carmen-Maria, 2011).

2 Managing fraud risk: The audit committee perspective Fraud in a fi nancial statement audit

CAS 300 requires auditors to their audit using a risk based model where the nature, timing and extent of audit procedures are based on the assessed risk of material misstatement. Pickett (2006) argues that for audits to be effective and efficient, much of the audit effort should be focused on areas that are considered to pose the highest audit risk. Additional audit procedures should be linked to individual audit assertions whereas other audit procedures need to be performed as and when needed. Thus, for an audit plan to be put in place, it is necessary for an auditor to come up with a risk profile of the client comprising an understanding of the business operating by the audit client, assess business risk and also perform its preliminary analytical review.

(Coffey et al., 2003; Cox et al., 2001; Finn et al., 2000). These findings are correlational,

Difficult to locate the fees by the auditors (more difficult than #2 because doesn’t increase the price as much)

Elder, A. A., Beasley, M., & Elder, R. J. (2014). Auditing and assurance services (15th ed.). Upper Saddle River, NJ: Pearson.

magnitude of these risks, this paper advocates for a more proactive solution. Active investing in

Cernauskas, D., & Tarantino, A. (2011). Essentials of Risk Management in Finance. Hoboken: John Wiley & Sons, Inc.

Arens, A. A., Elder, R. J., & Beasley, M. S. (2013). Auditing and Assurance Services. Old Tappan, NJ: Pearson Education.

The authors relied heavily on two studies to create their argument. The first study mentioned was the Pinto et al article. In this study, "Pinto and colleagues (5) assessed the

I take your concerns with the doubling of the audit fees very seriously, therefore, it is my responsibility to explain to you the justification for the fee increase. You are probably aware of the fact that Sarbanes-Oxley Act and PCBO Auditing Standard No.5 introduced changes in the requirements for the issue of financial statements for public companies. In fact, under Section 302 of the Sarbanes-Oxley Act management of the company is required to assess its company’s internal control and present the report on internal control over the financial reporting. In the case where there is a material weaknesses in internal control, management needs to inform the public about it. Also, Section 302 stipulates that a company’s CEO and CFO will have to certify its company’s financial statements which means that there will be personal legal consequences if they present misleading financial statements. In addition, changes were made regarding the auditing process of internal controls of the company. These changes include the integration of the audit of internal controls with the audit of financial statements. In accordance to PCABO Auditing Standard No. 5, our team will have to conduct a multi-step audit process where we’ll have to plan the engagement, use a top-down approach, perform testing of controls, evaluate identified deficiencies, if there are any, in order to identify material weakness in internal control, and issue an opinion regarding the effectiveness of the internal control. Furthermore, to satisfy our adherence to new requirements we’ll have to produce

1) Internal Auditors are expected to add value to the organization through improved operational effectiveness. In addition, their responsibilities include all the following except:

When looking at the total assets, there is an inverse relationship between the amount of assets and the audit fees paid. Apple Inc. had the largest amount of total assets but paid the least amount in audit fees. On the other hand, Microsoft had the least amount of total assets but paid the most in audit fees. Finally, Walmart had the median amount of total assets and paid the median amount in fees. Comparing the fees by revenue did not produce any clear patterns, but comparing them by assets showed a clear inverse relationship.

It is important to indicate that a country risk analysis is not static. As factors of the analysis change within the country, the risk of investing in that country also changes. These analyses are fluid and are always fluctuating. Changes can be indicative of deliberate governmental action taken by the country while other times the risks may change because of an action other countries have taken. The purpose of this paper is to create a risk analysis for the Republic of Nicaragua and to explain the

As MFRs are enforced, there becomes only three reasonable audit firms for big companies to choose from, assuming they want to maintain the reputational and signaling benefits associated with having Big 4 firms as their auditors (Blouin, Grein, Rountree 2007, 631). On the demand side, the same number of companies would be purchasing audit services at the onset of MFR regulation. Gradually, in anticipation for future rotations, companies will be forced to create schedules and strategies to cope with switching audit firms. In short, companies will have periods in which the demand they have for audit firms will overlap, therefore causing the anticipated steady demand rate to increase. Thus, while supply begins to shift down, we can see demand inversely shifting up. As a result, audit fees increase. However, it is possible that in anticipation of companies looking for new auditors, auditors would in turn compete for new clients by proposing lower audit fees.