Audit Plan- Glaxosmithkline
Audit Plan- GlaxoSmithKline (GSK)
Key business and audit risk:
In order to make the report more efficient we must identify the key areas of business risk and auditing risk. Business risk can be defined as the risk, which could affect an organization’s ability to achieve its objectives (Gray and Manson, 2007).
Audit risk is defined as the risk that the auditor gives an inappropriate audit opinion when the financial statements are materially misstated (Soltani, 2007). In Gray and Manson (2007)’s book Audit Risk can be split into three separate elements :
1- Inherent risk reflects the auditor’s opinion on the possibility of material misstatement on financial statement.
2- Control risk is the risk that internal control policies and procedures failed to detected or prevented.
3- Detection risk is defined as the likelihood that a material misstatement relating to an assertion will not be detected by the auditor 's substantive testing.
One should identify key area of what ? because if an auditor looks at each issue to the same extent then resources are spread to thinly and failure to detect material misstatement is more likely.
In producing an audit report one is providing an assurance that the financial statement provide a true and fair view on the performance and situation with the entity is facing. Therefore the key areas of business risk will be those that have the potential to have a material effect on the balance sheet or profit statement (Elliott&Elliott, 2008). This has therefore lead to the conclusion that are as such as sales misstatement, valuation of goodwill, valuation of intangible assets and valuation of PPE being the key areas of potential business risk.
Misstatement of assets
The reasoning as to why goodwill and the valuation of intangible assets has been included is because GSK have proceeded with a number of takeovers of smaller entities, including the purchase of Stiefel Laboratories Inc (GSK’s annual report, 2009, p.99). This
Key business and audit risk:
In order to make the report more efficient we must identify the key areas of business risk and auditing risk. Business risk can be defined as the risk, which could affect an organization’s ability to achieve its objectives (Gray and Manson, 2007).
Audit risk is defined as the risk that the auditor gives an inappropriate audit opinion when the financial statements are materially misstated (Soltani, 2007). In Gray and Manson (2007)’s book Audit Risk can be split into three separate elements :
1- Inherent risk reflects the auditor’s opinion on the possibility of material misstatement on financial statement.
2- Control risk is the risk that internal control policies and procedures failed to detected or prevented.
3- Detection risk is defined as the likelihood that a material misstatement relating to an assertion will not be detected by the auditor 's substantive testing.
One should identify key area of what ? because if an auditor looks at each issue to the same extent then resources are spread to thinly and failure to detect material misstatement is more likely.
In producing an audit report one is providing an assurance that the financial statement provide a true and fair view on the performance and situation with the entity is facing. Therefore the key areas of business risk will be those that have the potential to have a material effect on the balance sheet or profit statement (Elliott&Elliott, 2008). This has therefore lead to the conclusion that are as such as sales misstatement, valuation of goodwill, valuation of intangible assets and valuation of PPE being the key areas of potential business risk.
Misstatement of assets
The reasoning as to why goodwill and the valuation of intangible assets has been included is because GSK have proceeded with a number of takeovers of smaller entities, including the purchase of Stiefel Laboratories Inc (GSK’s annual report, 2009, p.99). This