Objective strategies and related business risks 14 Observation and inspection

Objective strategies and related business risks 14

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13. Objective, strategies and related business risks 14. Observation and inspection: e.g. tracking transactions through the information system relevant to financial reporting, which may be performed as part of a walkthrough. 15. Internal control: is the label given to the entity’s policies and procedures designed to provide reasonable assurance about the achievement of the entity’s objectives a.Active and qualified board of directors and independent audit committee membersb.Efective risk assessment processc.Competent and objective internal audit functiond.Proper authorization of transactionse.Procedures to ensure assets existf.Monitoring of controls 16. Assessing the risk of material misstatement. 17. Assess the efectiveness of internal control in order to: potential misstatements and ..
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18. Examples of misstatements include: 19. Fraud can be classified into two types: a.Misstatement resulting from fraudulent financial reporting b.Misstatements resulting from misappropriation of assets 20. The fraud risk identification process includes: a. Sources of information about possible fraud― i. Discussion among the audit team: professional skepticism, ii. Inquiries of management and others: should consider inquiries from others within the entity and their parties. iii. Analytical procedures: 1. Incentirve/pressure 2. Opportunities 3. rationalize iv. Investigation of unexpected period-end adjustments v. Identification of fraud risk factors 21. As lower acceptable levels of both audit risk and materiality are established, the auditor should plan more work on individual account to find smaller errors.
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