ACCT 497 Lecture Notes - Lecture 10: Tax Haven, Embezzlement, Financial Statement
22 Feb 2017
School
Department
Course
Professor
Document Summary
Program to make sure they check everything they should check. Aicpa might want to check when someone issues an audit report, that someone actually did the report. Risk factors related to fraudulent financial reporting: 1) management"s characteristics and influence, 2) industry conditions, 3) operating characteristics and financial stability. Other definitions related to fraud: employee fraud, larceny. Inherent risk: factors affecting account inherent risk include: Control risk: control risk (cr) is the likelihood that a material misstatement would not be caught by the client"s internal controls, factors affecting control risk include: The environment in which the company operates (its control environment ). The existence (or lack thereof) and effectiveness of control activities. Monitoring activities (audit committee, internal audit function, etc. Detection risk: detection risk (dr) is the risk that a material misstatement would not be caught by audit procedures, factors affecting detection risk include: Nature, timing, and extent of audit procedures. Sampling risk: risk of choosing an unrepresentative sample.
