Success in financial business management: A case study Site and Sounds Ltd
Summary :
Table of Contents
- Introduction
- The audit risk involved in the company's financial statements
- Comparison between the 2005 and 2006 financial statements
- Description of strength and test of control
- Description of weakness and possible internal control
- The accounting frauds and scandals perpetuated by management
- Conclusion
- Bibliography
Abstract
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.
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