lecture 10-25 - ACC 310 Lecture Notes 10/25/11 Audit Risk...

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ACC 310 Lecture Notes – 10/25/11 Audit Risk – Goal Remote - Applies to every general ledger account - Inherent Risk (higher or lower) - Control Risk (higher/lower, highest/moderate/low/minimal) - Detection Risk Basis for not testing everything – Reasonable Assurance Combined Risk Assessment Inherent, Control, and Detection Risks Detection Risk Professional Judgment by doing more procedures Nature, Timing, and Extent (How many? How much?) Determined by Auditor Qualitative formula Chapter 3 – Slide – 3.4 Auditor Responsibilty for detecting errors, frauds, and illegal acts   Responsible for Detection? Must Communicate Findings?     Material   Immaterial   Material   Immaterial   Errors   Yes   No   Yes (Audit  Committee)   No   Fraud   Yes   No   Yes (Audit  Committee)   Yes (One level  above)   Illegal Acts   Yes (Direct Effect)       No   Yes (Audit  Committee)   Yes (One level  above)
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Factors affecting account inherent risk include: - Dollar size of the account
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This note was uploaded on 11/02/2011 for the course ACCOUNTING 310 taught by Professor Birtchnell during the Spring '11 term at Golden Gate.

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lecture 10-25 - ACC 310 Lecture Notes 10/25/11 Audit Risk...

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