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For each of the following situations, describe how risk of material misstatement should be assessed and what effect the assessment will have on detection risk.
(i) Johnson is a fast-growing trucking company. The company is publicly held, but Ivan Johnson and his sons control 55% of the shares. Mr Johnson is Chairman of the Board and Chief Executive Officer (CEO). He personally makes all major decisions with little consultation with the Board of Directors. Most of the directors, however, are either members of the Johnson family or long-standing friends. The board basically rubber-stamps Mr Johnson's decisions.
(ii) The Focus Bank has been your client for the past two years. During that period, you have had numerous arguments with the president and the controller over a number of accounting issues. The major issue is related to the bank's reserves for loan losses and the value of collateral. Your prior audits have indicated that a significant adjustment is required each year to the loan loss reserves.
Subsequent Events - Audit Process IAS 10 Events after the Balance Sheet Date prescribes the accounting for, and disclosure of, events than the balance sheet date. Events th
what difference between risk assessment procedure and substantive procedures? could you please provide some examples on each procedure?
Indications of inapplicability of Going Concern Unfortunately, Insolvency is a development industry as the economy suffers a down turn and consequently for a majority of enter
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Related Party Transactions Related party transactions-a transfer of obligations or resources among related parties, regardless of whereas a price is charged. A party is rel
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during the preliminary stage of an audit, an auditor most likely would not do the following
internal control procedures to be put in place when purchasing a motor vehicle
Simple Plans - An employer can adopt a simplified retirement plan known as a SIMPLE Plan (Savings incentive match plan for employees) if it has fewer than 100 employees that receiv
Classification of Management Representations The thing to note is which during the course of the audit the auditor obtains various representations from the management which ca
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