L22 Notes_Part_22 - Working Capital (5%) R&D...

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© W.R. Knechel Fraud Triangle Perceived Opportunity Perceived Pressure Rationalization
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© W.R. Knechel Core Audit Concepts Materiality Evidence Risk
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Materiality Definition: Amount of omission or misstatement that would affect a reasonable person’s decision. Quantitative Bases: Net Income (5%) Total Assets (3%) Equity (5%) Mutual fund (1/2%-2%)
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Unformatted text preview: Working Capital (5%) R&D (biotech startup) Sales (pharmaceutical) 3% Real Estate (1%) NFP (1/2%-2%) Qualitative Factors: Management Fraud Profit vs. Loss Debt Covenant Restrictions Change in Earnings Trend Affect of Error in B/S or I/S account Meeting analysts expectation Meeting or exceeding incentive goals...
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L22 Notes_Part_22 - Working Capital (5%) R&D...

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