Question

"Evidence Collection Procedures" Please respond to the following: Use the Internet or Strayer Library to research at least two (2) companies that have experienced downgrades related to stock performance or bond ratings within the last five (5) years. Next, analyze the primary ways in which auditors would use the information from downgrades to assess business risk or evaluate the likelihood that the downgrades would impact the auditor's assessment of the client's business environment. Ascertain the major ways in which this information would impact the audit risk model equation. Support your position. According to an article in the CPA Journal, the auditor considers reliability of audit evidence collected and the reliability of that evidence to reduce the risk of financial statements containing undetected material errors. Compare and contrast at least two (2) types of evidence, and make a recommendation as to which you believe is the most reliable in reducing risk. Support your position.

Answer 1

Ans :-

Two organizations which have encountered minimize identified with stock execution or bond rating amid most recent 5 years are :-

( a) . Sony Corporation

( b) . Linked In

Downsizes give the evaluator's a thought of future feasibility of the organization . Downsizes propose that obligation of the organization is more than its receivable , or that the organization has inappropriate administration . Subsequently this data would empower the evaluator to shape a conclusion that the business hazard is high for banks and even the financial specialists may not recover their cash .

Confirmations :-

The facts confirm that the inspector considers unwavering quality of review proof to lessen the danger of fiscal reports containing undetected material blunders . Here is an examination of 2 such proof :-

1. Affirmation from sundry account holders as to equalization's and perception that they much of the time coordinate with parities as in books of customer . This would be exceptionally exhaustive and increasingly decisive in framing a feeling and decreasing danger of fiscal summary containing undetected material mistakes .
2. Check of offer solicitations : - This evaluator's would teat be able to confirm yet this would not be as much accommodating as the above proof .