External Auditing – Week 4 discussion What do following risk categories mean: planned detection risk‚ inherent risk‚ control risk‚ acceptable audit risk? Can you give some examples? How do we as auditors deal with them? DETECTION RISK Detection risk is the risk that auditor’s substantive procedures will not detect a misstatement that exist in an account balance or class of transactions that could be material‚ individually or when aggregated with misstatements in other balances or classes.
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Comment on the 10 major steps in the fraud risk model 1. Understand the nature of fraud by identifying the factors associated with fraud that are outlined in the fraud triangle. The factors include rationalization‚ opportunity‚ and incentive (ROI). Incentive/pressure to commit fraud Fraudulent financial reporting Management compensation schemes Financial pressures to improve company’s earnings and balance sheet Personal wealth tied to either financial results or survival of company Defalcation
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this question needs the explanation of inter-relation between business risk and audit risk‚ which is automatically‚ must include the risk analysis as an approach to auditing to overcome with the concern of handling these risks. Before entering deeper to the business risk and how an auditor can manage and be aware of these risks‚ lets define and describe some of the terms which is related to this question as follows:- Business risk is generally defined as the threat posed by an event or action
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officers. For this reason‚ auditing and assurance services must sign-off or attest to the credibility and reliability of written assertions. Creditors rely on the accuracy of financial reports when calculating the risk and interest rate of loans. Investors and employees need reliable information when allocating their precious resources. Governmental agencies require transparency and compliance to insure the public is not being victimized by fraud. Do increased auditing requirements guarantee that
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Risk Management Approach We have recently have been privileged in meeting and hearing the President of the United States of America speak at our school. Before his arrival we‚ and the secret service would had to have perform risk management approach ensuring the safety of the president and everyone in the vicinity of the president. It is important that before his arrival we are able to identify all the potential risks when he comes to Hartford. Secondly after identifying the risks we given
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BF3394 – AUDITING AND PROFESSIONAL ETHICS Module Number: Module Title: BF3394 AUDITING & PROFESSIONAL ETHICS 10 credits Number of Aston Credits: Total Number of ECTS Credits: 5 credits (European Credit Transfer) Staff Member Responsible for the Module: Dr Melina Manochin Finance and Accounting Group ABS Building‚ Room 410‚ Extension 3732 m.m.manochin@aston.ac.uk Availability: Please see office hours on door or group administrator‚ Ms Rosaleen Shirley‚ ABS 404‚ Extension 3238 Other Staff
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Ch.5 Reading Questions – Civil Liberties 1. How do civil liberties often involve a conflict between different liberties? Civil liberties are basic rights given to everybody. It often involves conflict because discrimination exists between people of different race or gender and some people don’t think different people deserve the same civil liberties‚ even though civil liberties should be the same for every human being 2. Read the textbook and the handout on the incorporation doctrine and write
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_____ and that of long-term bonds _____. A) decreases; decreases B) increases; decreases C) increases; increases D) decreases; increases 1) 2) If the expected return on ABC stock is unchanged and the expected return on CBS stock falls from 10 to 5 percent‚ then the expected return of holding CBS stock _____ relative to ABC stock and the demand for ABC stock _____. A) rises; rises B) rises; falls C) falls; rises D) falls; falls 2) 3) If housing prices are suddenly expected to shoot up‚ then
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Chapter 14 Auditing the Revenue Cycle |Learning Check | 14-1. a. The revenue cycle includes the activities involved in the exchange of goods and services with customers and the realization of the revenue in cash. b. The classes of transactions in this cycle for a merchandising company are sales‚ sales adjustments‚ and cash receipts. The primary accounts affected by these transactions are sales‚ accounts receivable‚ cost of sales‚ inventory‚ cash‚ sales
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Ch 5 Margin and Big Picture Answers Margin Review Questions 1 What different answers to the problem of disorder arose in classical China? • Three major schools of thought that emerged from the Warring States period. • Legalism was a hardheaded practical philosophy based on a rather pessimistic view of human nature that assumed that people were stupid and shortsighted. • Supporters of Legalism argued that only the state could act in the long-term interests of society as a whole. They advocated
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