Strategic%20Analysis%20of%20the%20Client%20%28October%2010%2c%202011%29

Strategic%20Analysis%20of%20the%20Client%20%28October%2010%2c%202011%29

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Unformatted text preview: Strategic Analysis of the Client Tim Bauer ACCY 405 October 10, 2011 Announcements • Group Talk #5 will be held on Monday, October 17. – Topic: Apple is Our Client • AE2: Casino Royale • AE3: Pompous Assets • AE7: Day Bau Bau • All Other Teams: be prepared to bring your typed, one-page justification for your revenue estimate to class. – Due Monday, October 17 • Midterm Exam #1 to be handed back at the end of class Today’s Objectives • Recap of Alternative Risk Models. • Acquiring EBS Evidence à Strategic Analysis. • Discussion of Expectations Formation. • Group Activity: I Scream, You Scream, We All Scream for Ice Cream (ISIC) • Overall Purpose: Rich client knowledge à Well informed expectations à Better risk assessments à Better audits. Recap of Module II • Purpose of Module II: To develop your risk assessment and audit planning skills. We want to use the best available methods to assess risk. Recap of Module II (1) The business environment & regulatory environment has changed, and auditing has changed to adapt to this changing environment & to enhance audit quality. (2) Many audit failures occur due to inadequate control of non- sampling risk. (e.g. the auditor does not have a rich understanding of the client's business model). (3) The audit risk model is very useful in planning the audit (e.g. a high assessed risk of material misstatement can be counterbalanced by reducing planned detection risk because this will get us to our acceptable level of overall audit risk). Recap of Module II (4) Strategic-systems auditing (SSA) addresses many of the weaknesses of the audit risk model & views the entire audit as a recursive process of evidence-driven belief-based risk assessment . (5) Auditors attempt to provide high assurance about the extent to which management's financial statement representations fairly depict select entity business states (EBS). EBS are all of the client's business strategies, conditions, processes and economic actions/events , as well as past, current and likely future business relationships with other entities. Recap of Module II...
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Strategic%20Analysis%20of%20the%20Client%20%28October%2010%2c%202011%29

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