BU477 Lecture Notes - Lecture 16: Accounts Receivable, Audit Risk, Financial Statement
Document Summary
Chapter 10: table: 10-1 on the exam!!! Know what types of evidences go with what. Test!!!: substantive testing- typically tests specific balances and tests for the risk of. If control risk is assessed as high, the auditor would follow a substantive approach; if control risk is assessed lower, the auditor could follow a combined approach. This is often done when clients want to issue statements soon after the balance sheet date so that work can be done during the interim period: summary of audit process. I(cid:374)here(cid:374)t risk goes do(cid:449)(cid:374) (cid:271)e(cid:272)ause (cid:449)e"(cid:448)e do(cid:374)e the audit for 5 years a(cid:374)d the results have always been great. Inventory is hard to count so inherent risk goes up; had to confirm (cid:374)u(cid:373)(cid:271)ers that (cid:449)e"re gi(cid:448)e(cid:374: excellent financial condition so inherent risk goes down; as less likely to manipulate fs. Inherent risk high: management may manipulate results due to severe underfinancing.
