Scribd
Upload
36 views1 page

Points - AUDIT RISK

The document outlines various audit risks and responses related to financial reporting, including provisions for redundancies, data transfer errors, and compliance with IAS 16 for asset revaluation. It emphasizes the need for thorough verification of loans, asset purchases, and revenue recognition criteria, as well as assessing risks associated with new clients and material misstatements. Additionally, it addresses issues related to bad debts, product recalls, and the impact of profitability on financial manipulation.

Uploaded by

seethus2005
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
36 views1 page

Points - AUDIT RISK

The document outlines various audit risks and responses related to financial reporting, including provisions for redundancies, data transfer errors, and compliance with IAS 16 for asset revaluation. It emphasizes the need for thorough verification of loans, asset purchases, and revenue recognition criteria, as well as assessing risks associated with new clients and material misstatements. Additionally, it addresses issues related to bad debts, product recalls, and the impact of profitability on financial manipulation.

Uploaded by

seethus2005
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

AUDIT RISK

1. Employees being made redundant- Provision should be recognised.


2. Outsource :
 Detection risk (Data with 3rd party; no adequate documents to
verify with)
 Errors in transfer of data
3. Revaluation – Response- Discuss with management the process
undertaken for revaluation; confirm compliance w IAS 16.
4. Long Term Loan – As a response, FIRST CONFIRM that the loan exists;
verify with the loan agreement.
5. Any new asset purchased (Tang or Non)- Confirm the purchase price
FIRST as a response.
6. Cost or NRV issue – response- Inspect aged inv and identify the inv. Then,
undertake detailed C or NRV testing.
7. Bad debts- Extended post year end cash receipts testing; Also consider
adequacy of any allowance for receivables.
8. Revenue- performance obligation (deposit) : Discuss with management
the criteria for determining the satisfaction of performance obligation.
9. Attends only some sites: Assess areas with high risk of material
misstatement-prioritise-for the sites not attended, review
documentation and test the internal controls in place
[Link] misstatement: compare prev yr prov with actual claims
[Link]: Consider the extend to which sufficient appropriate
evidence can be obtained from the client
[Link] Client- Less assurance over opening balances since it is not our co
that performed last year’s audit
[Link] issued- mention about disclosure requirements
[Link] issue- agree the increase in share capital with the decrease in
reserves.
15. Profitability, int cover decreasing- risk of manipulation
[Link] good on a sale or return basis- IFRS 15 rev can be recognised
only if the co foresees that the goods won’t be returned. Until then:
refund liability. Once the period is complete: revenue
[Link] recall- sales to be derecognised, refund liability to be
recognised; also inv consists of returned goods IAS 2
[Link] promise- revenue can be recognised only after satisfaction of perf
obligations; refund liability to be recorded.

You might also like