What are the risks and liability factors in an audit?
Not what you're looking for?
What are the risks and liability factors in an audit?
What are the implications to the auditor?
What are the implications to the organization?
How can the auditor mitigate these risks and liability factors?
Purchase this Solution
Solution Summary
The 713 word cited solution presents a comprehensive explanation for each of the four questions including practical information that is relevant to the internal practices of audit firms.
Solution Preview
What are the risks and liability factors in an audit?
The most important audit risk to the auditors is that they may give an unqualified opinion on the financial statements of a company that are materially misstated. The result could generate lawsuits, serious damage to reputations, or loss of value to stakeholders.
There is a large body of literature which discusses methods and procedures to try to avoid material misstatement. An auditor cannot possibly examine every transaction for a client for a year in order to determine that there will be no material misstatement. Therefore, procedures are designed to detect errors in an effort to avoid misstatements.
On the other hand, auditors have to compete for fees in the marketplace, and it is a serious task to determine how to minimize testing and other procedures to formulate a reasonable basis for an opinion.
What are the implications to the auditor?
When a financial statement has been issued and is later determined to be materially misstated, the auditor must correct the statements and reissue. Other than possible ...
Purchase this Solution
Free BrainMass Quizzes
Balance Sheet
The Fundamental Classified Balance Sheet. What to know to make it easy.
Managing the Older Worker
This quiz will let you know some of the basics of dealing with older workers. This is increasingly important for managers and human resource workers as many countries are facing an increase in older people in the workforce
Understanding Management
This quiz will help you understand the dimensions of employee diversity as well as how to manage a culturally diverse workforce.
IPOs
This Quiz is compiled of questions that pertain to IPOs (Initial Public Offerings)
Production and cost theory
Understanding production and cost phenomena will permit firms to make wise decisions concerning output volume.