Explain why the account balance is at significant risk of material misstatement. [ad_1]
For your audit team’s (group’s) chosen client (as approved by your lecturer), address the following six areas.
1.General and industry-specific economic trends and conditions
3.Product, customer and supplier information
4.Technological advances and the effect of the internet
5.Laws and regulatory requirements.
Your task is to research your client’s sector and report back to your audit team leader. Your report will form part of the overall understanding of client’s structure and its environment, which will help you plan for the financial report audit of this client.
You should concentrate your research on providing findings from those areas that have a financial reporting impact and are considered probable given your client’s operations. In conducting your research, you should consider the following key market forces, as they relate to your client’s operations.
Part 2: Risk of Material Misstatement (Inherent Risk) at the Financial Report Level
From your Understanding of the Client (i.e., Part 1), identify one (1) specific account balance (not account classifications!) that you consider at significant risk of material misstatement. For your chosen account balance:
a) Explain why the account balance is at significant risk of material misstatement
b) Explain one, key assertion at risk of not being valid
c) Detail one (1) relevant substantive audit procedure to address the assertion at risk as identified in b)
d) Detail one (1) relevant practical internal control that would mitigate the risk in relation to the assertion at risk as identified in b)