Flashcards in 14 - Planning Assessing Risk Deck (7)
What is included in the audit strategy memorandum?
What is audit risk?
Inherent risk x control risk x detection risk
In what cases would inherent risk be higher?
Significant development occurred
Accounting is complex
Non routine transaction
Judgements required, e.g estimates
What are the financial statement level risks?
Weak control environment
What are the two different types of fraud?
Fraudulent financial reporting
Missappropriation of assets
Fraud risk factors?
Incentive or pressure to commit fraud
Perceived opportunity to commit fraud
Ability to rationalise the fraudulent action