List the factors that may affect your assessment of S&S's inherent risk i.e. factors that increase as well as those that decrease inherent risk. Briefly discuss the impact of your analysis on your overall audit plan. Audit risk is the risk that my audit team provides an inappropriate opinion on S&S's financial statements for the year ending June 30 2006. In other words, it is the risk that my audit states that the Company's financial statements present fairly the financial position of S&S when it fact they don't. Audit risk is computed by multiplying the inherent risk, control risk, and detection risk.Second, inherent risk is the risk that measures my audit team's assessment that there may not be material misstatements in the Company's financial statements before considering the effectiveness of S&S's internal controls. Remember that the risk attributable to internal controls is considered in control risk. As such, if my team concludes that there is a high likelihood of misstatement, without taking into account internal controls, then my team concludes that the inherent risk is high, and hence would modify the overall audit plan accordingly.Taking all the above into consideration, the following are the factors that may affect my assessment (as the audit manager) of S&S's inherent risk i.e. factors that increase as well as those that decrease the Company's inherent risk. For each factor, I briefly discuss its impact on my overall audit plan.
[...] So Betty can replace Bob as the S&S's audit partner to ensure the public and S&S's stockholders of the integrity and independence of the audit firm and its opinion on whether the financial statements of the S&S present fairly the financial position of the Company as of June Because the audit firm has rendered a series of one off internal control reviews and accounting advice for the audit firm needs to undertake measures that the audit it performs for S&S financial statements for the year ended June is independent, objective, and with integrity. [...]
[...] Enron was accused of accounting fraud in order to hide the true financial health of the company and in order to further inflate the company's stock price but, now, no longer exists. The telecom giant WorldCom's underreporting of nearly billion in expenses (Electronic Commerce News, 2002). But before I argue against the statement “Auditors are to blame for the recent spate of major corporate collapses. They side with management rather than protect the poor shareholder. neither the profession nor the government does much about these let me just say something about ethics first. [...]
[...] Second, the market and regulators are partly to blame to the epidemic proportion of malfeasance in corporations that resulted to the collapse of a few. As Ketz said: “That economics counts implies that concerns over accounting scandals occur only when investors lose money. If the markets are booming, who cares if managers lie about the accounting numbers?” (2003, p. A09). The level of corporate malfeasance wouldn't have reached its epidemic proportion if the market, the public, the stockholders, the regulators, and the government should more concern on corporate governance than they did. [...]
[...] As such, I will plan to increase the audit effort of my team in ascertaining that the figures reflected in the Company's sales and related accounts present fairly S&S's financial position for those accounts. One of the firm's partners, Bob, has been the engagement partner of S&S's audit over the last eight years and will be in this year's audit. He has developed a long and trusting relationship over the years with S&S's CEO. Couple this factor with my experience as the audit manager for S&S this is my first year to be and the series of one off internal control reviews and accounting advice the audit firm has given then I assess that the overall inherent risk for the Company's financial statement for the year ended June is relatively high. [...]
[...] Upon receipt of goods, the warehouse Payments to supplier are based on assistants check the delivery Company's delivery docket and not against the delivery company's from supplier's delivery statement. docket, and will change the delivery docket if any discrepancy exists. This means that the original copy of the docket is not kept. Section C Provide a balanced argument for and against this statement based on recent developments in the area. Your answer should consider the role that auditor independence has played in recent audit failures. [...]
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