In the dialogue between the Kingston auditors, Fred said, Our analytical procedures related to receivables didnt show
Question:
Jack replied, “That’s good news if the problems are immaterial. Too bad we can’t say analytical procedures reduce our audit risk. What about internal control?”
Fred responded: “I’d say it’s about a 50–50 proposition. Sometimes control seemed to work well; sometimes it didn’t. I noticed a few new people doing the invoice processing last week when we were here for a conference. Incidentally, I lump the inherent risk problems and internal control risk problems together when I think about internal control risk. Anyway, firm policy is to plan a sample for a low overall audit risk for the receivables.”
Required:
Based on this dialogue information, use the expanded risk model to determine a test of detail risk. Relate this risk to sample-size determination.
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Related Book For
Auditing An International Approach
ISBN: 978-0071051415
6th edition
Authors: Wally J. Smieliauskas, Kathryn Bewley
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