(a) Provide some examples of the types and sources of information auditors use to assess inherent risk. (b) Describe the major components for the control environment and how feature of each can contribute to a stronger control environment.
a) Inherent risk of financial statements is the risk that cannot be avoided and will exist irrespective of an high quality audit.
Some of the types and sources of information auditors use to assess inherent risk are:
1.Management reports in the financial statements
2. Use an expert opinion and judgement
3. Carefully evaluating high complex transactions and unusual accounting entries
4. Assets that have high susceptibility for loss such as cash
5. Examining the reliability of estimates used in the financial statements.
b) Major components of internal control are :
1. Existence - An internal control system must exist in every organization to prevent any complacent behavior.
2. Effectiveness - The system must be effective to prevent any financial risks and increase reliability of the system.
3. Continuity- The controls have to be applied throughout all periods and in every transaction.
(a) Provide some examples of the types and sources of information auditors use to assess inherent...
Chapter 7:Internal Control Question1: Because of the Inherent inconsistency of automated controls, auditors will test them at various times in the year to determine their operating effectiveness. True False Question2: A correct response by management to an assessment of risk could include taking no action because the risk is consistent with the risk tolerance of the organization. True False Question3: A primary objective of procedures performed to obtain an understanding of internal control is to provide an auditor with Knowledge...
A) Auditors often must request information from the client while completing various audit tasks. What are some of the issues that the auditors may encounter when requesting evidence from clients and how should they deal with those issues? B) What is the difference between inherent risk and control risk? Why is it important that auditors not assume that a certain level of control risk exists when assessing inherent risk? C) What were some of the risk factors that may impact...
(a) Give examples of how auditors gather information to help execute each step in Audit Planning (b) Describe materiality in general terms; discuss how auditors set materiality, and describe what role it plays in the audit. (c) Describe the factors auditors consider in setting audit risk
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1. Define internal control. 2. Internal control provides reasonable assurance. Explain. 3. What are the objectives of a system of internal control? 4. Enumerate, and explain briefly, the components of an internal control. 5. What is the control environment? What are the elements that comprise the control environment? 6. What is meant by risk assessment process? 7. What is an information system? 8. What are control activities? 9. Give the different types of control activities. 10. Why is it necessary...
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provide in 100 words describe some examples of both ethical and legal circumstances where you can apply the concepts of beneficence and nonmaleficence. Explain how these concepts work within your examples to provide protection to both the organizations and the patients?