CINEPLEX INC risk profile 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.
Knowledge about risks related to the company evaluated as part of the auditor 's client acceptance and retention evaluation; and the relative complexity of the company 's operations. ( Auditing Standard No. 9 //. (n.d.).
#3. Inherent Risk Factors; audit planning decisions. Businesses that face extreme competition are susceptible to many inherent risk factors – the measurement of the auditor’s assessment of the likelihood that there are material misstatements in an account balance before considering the effectiveness of internal control. Complex valuation issues and related party transactions are two such factors that would affect audit planning decisions. Valuation issues may lead the audit team to request more evidence, if they choose to accept the audit at all. Risks such as inventory turnover leading to potential misstatements of inventory, costs of goods sold, or obsolescence of inventory may influence the audit firm’s decision to hire outside specialists to assist in the audit. Another inherent risk factor, client business risk (competitive
ACC 460 Final Exam Copy this link to your browser and download http://www.finalexamguide.com/ACC-460-Final-Exam-198.htm 1) Determining whether amounts are in conformity with generally accepted accounting principles addresses the proper measurement of assets, liabilities, revenues, and expenses, which includes all of the following EXCEPT the A. consistency in applying accounting principles. B. reasonableness of management’s accounting estimates. C.
b) General Standard #3: The auditor must exercise due professional care in the performance of the audit and the preparation of the report (AICPA). They failed to act in a professional manner and to practice due care when they violated any of the standards.
The auditor must obtain a sufficient understanding of the entity and its environment, including its internal control, to assess the risk of material misstatement of the FS whether due to error or fraud and to
ACCT3014 Research Assignment Discussion of the article The media article indicated that Coles was facing more than $4 million fines, as ACCC argued its behaviour of lying about bread freshness could constitute breach of consumer law (SMH 2015). As the total amount of fines could be considerable, along with a negative impact on reputation, Coles could have entered into financial distress. The reason I chose this article was that most Australian people shop in Coles every week, thus the case is closely related to our life which is worth talking about. Besides, the article covered issue of sales and non-compliance of law which often attract auditors’ attention. The event mentioned in the article posed a risk to auditors in terms of inherent risk. Inherent risk means an auditor fails to identify or correctly understand the business risks that could result in material misstatement (Clubb 2015b). It is apparent that Coles’ behaviour is a non-compliance of law, which is included in business risk (Clubb 2015b). Therefore, auditors need to better understand the event highlighted in the article to increase the possibility of uncovering material misstatement. Auditors are held accountable for the problem because the problem may relate to potential misstatement in financial statements. If an auditor fails to uncover the misstatement, it is likely that he or she will issue a false opinion. However, auditor should express a true and fair view to increase the confidence of the external
* Understand the client’s business and industry: * Assess client business risk * Perform preliminary analytical procedures (2) Internal Control Phase: The auditor normally assesses the risk of material misstatement by examining both the general control environment and the application controls per business process
Friendship Ark Homes receives The only aspect of an audit report that I was aware of is the inclusion of the four financial statements – statement of cash flows, balance sheet, income statement, and statement of retained earnings. It is the auditor’s job to express an opinion on the financial statements based on the review I did not know all of the detail that a report entails. I originally thought only the statements were given with no explanation. However, it is comprised of notes to financial statements to supplement the analysis, which includes endowment funds summary, income tax exemption information, recommendations, and the independent auditor’s report which outlines management’s responsibility as well as the auditors, their opinion, and report on summarized comparative
A review and an audit report are both a form of an attestation engagement. A Review, however, is less in scope so it provides a moderate level of assurance on the financial statements. It is considered a “sniff” of an audit, which comparatively provides reasonable assurance that no material misstatements occurred. Since a review deals with a limited scope, it does not provide the basis for expressing an opinion on the presentation of the
12-9: According to AU 240, auditors should exercise professional skepticism during the audit and discuss the risks of material misstatement due to fraud (Wells, 2013, p. 330). The auditor should also discuss the implications of the audit with the appropriate level of management. Finally, the auditor should obtain sufficient evidence to determine if material fraud exists and what the impact on the actual financial statements is (Wells, 2013, pp.
Crazy Eddie Case Questions 1. Compute key ratios and other financial measures for Crazy Eddie during the period 1984-1987. Identify and briefly explain the red flags in Crazy Eddie’s financial statements that suggested the firm posed a higher-than-normal level of audit risk. There were several red flags in Crazy Eddie’s financial statements.
Case 3-51 Pages 115 -117 1. Why might Koss management have placed so much trust in Sachdeva, along with minimal supervision and monitoring? Koss management might have placed so much trust in Sachdeva because she was is such a high position. She worked in the company as Vice President, when you are that
OVERALL OBJECTIVES OF THE INDEPENDENT AUDITOR AND THE CONDUCT OF AN AUDIT IN ACCORDANCE WITH PSAs
Sebagaimana diketahui bahwa definisi Pengendalian Intern yang dikemukakan commite on Auditing Procedur American Institute of Carified Public Accountant (ICPA) adalah sebagai beirkut :