Statistics indicates concern for both alpha and beta errors. In audit terms this might be described as being concerned about the risk of concluding that the financial statements are misrepresented when they are actually fair, AND the risk of saying that the financial statements are fair when they are not. However, audit risk is defined as the risk of issuing an unqualified audit report when the financial statements are misstated or ICFR is not effective. Why doesn’t audit risk include the opposite error as well?
Answer to relevant QuestionsWhy would the auditor want to inform management of problems with internal control as early as possible, so that remediation can be performed as early as possible? For each of the following accounts, list the 5 management assertions from most to least important for that account. State the reason justifying your order. Cash is completed as an example.The beginning of an auditing class is often frustrating for students because they feel there are so many things that they do not thoroughly understand. One of the challenges is that so many parts of an audit are either ...What are audit planning and risk assessment considered together, early in the audit?What is engagement risk? How does the auditor reduce this risk during the client acceptance process?
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