obtain an understanding of the entity and its environment‚ including its I/C‚ in order to assess the risk of material misstatement. * Determines the nature‚ extent‚ and timing of further audit procedures. * Risk of material misstatement comprises 2 separate risks * Inherent Risks * Susceptibility of a relevant assertion to a material misstatement *
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financial statement will contain a material misstatement and auditor should be careful in assessing it. The expectation of the new CEO of doubling the revenue in the coming year while the company has cut 20% of the company’s personnel seems unachievable‚ there is a risk that the new CEO‚ Mr. Yeung may intend to manipulate the accounting figures to achieve the objective under such pressure which constitute an inherent risk that may result in material misstatement of the overall financial statement.
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5.6 Case Instructional Notes Sarbox Scooter‚ Inc.: Scoping and Evaluation Judgments in the Audit of Internal Control over Financial Reporting Mark S. Beasley‚ Frank A. Buckless‚ Steven M. Glover‚ Douglas F. Prawitt INSTRUCTIONAL OBJECTIVES To help students gain an understanding of the steps involved in the scoping process for the audit of internal control over financial reporting. To provide an opportunity for students to determine the significance of accounts and locations based on both quantitative
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Khalia Brewer Accct 555 Week 7 Homework 20-17 A.(2)- have a paymaster who has no other payroll responsibility distribute the payroll checks. B.(3)- Employees might be paid for hours they did not work. C.(3)- authorization of transactions from the custody of related assets. 20-20 TYPE OF TEST TRANSACTION-RELATED AUDIT OBJECTIVE(S) 1. Substantive test of transactions To determine if monthly payroll costs have been correctly allocated (accuracy). 2. Test of control To determine if recorded
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risk of the auditor being sued because of association with an audit client. B. The risk that the auditor will provide an unqualified opinion on financial statements that are‚ in fact‚ materially misstated. C. The overall risk that a material misstatement exists in the financial statements. D. The risk that auditors use audit procedures that are inappropriate. 2 5. Which of the following best describes the fundamental‚ underlying reason for why there is demand for an independent auditor
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subsidiary‚ a work that was shared with another Big Eight firm. At the start of the work‚ Gene‚ his assistant‚ told Dan that Oliver was a strict authoritarian and a very inflexible man. During the course of the audit‚ Dan came across a material misstatement that legally required him to issue an "except for" opinion but his supervisor insisted on issuing a clean audit opinion‚ upon which Dan had several heated arguments with his supervisor. These events led Dan to question the fact that whether he
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allocation (measurement) Presentation and disclosure In planning and performing an audit‚ an auditor considers these assertions in the context of their relationship to a specific account balance or class of transactions. .63 The risk of material misstatement in financial statement assertions consists of inherent risk‚ control risk‚ and detection risk. Inherent risk is the susceptibility of an assertion to a
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3-29Audit Report (Case Study 3-29) Requirements For each situation‚ do the following; a) Identify which of the conditions requiring a deviation from or modification of an unqualified standard report is applicable. b) State the level of materiality as immaterial‚ material or highly material. If you cannot decide the level of materiality‚ state the additional information needed to make a decision. c) Given your answers in parts (a) and (b) ‚ state the appropriate audit report from the
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the chief financial officer (CFO) of Dropout Fones Pty Ltd‚ has discovered a significant misstatement that overstated assets in this year’s financial statements. The misleading financial statements are contained in the company’s annual report which is about to be issued to banks and other creditors. After much thought about the consequences of telling the managing director‚ Jack Frost‚ about this misstatement‚ John gathers up his courage and tells him. Jack says‚ ‘What they don’t know won’t hurt them
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ACCA COURSE NOTES June 2014 Examinations Paper F8 Audit and Assurance (INTERNATIONAL) Please spread the word about OpenTuition‚ so that all ACCA students can benefit. ONLY with your support can the site exist and continue to provide free study materials! OpenTuition Course Notes can be downloaded FREE from http://opentuition.com Copyright belongs to OpenTuition.com - please do not support piracy by downloading from other websites. Visit opentuition.com for the latest updates‚ watch free video
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