Essay about Risk Assessment Procedures At The Audit

Essay about Risk Assessment Procedures At The Audit

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Risk Assessment - Nick

As part of the audit, we are required to perform risk assessment procedures. The risk assessment procedures are used to help gain an understanding of the entity, its environment, and its internal control. Through this understanding we can better assess the risks of material misstatement whether due to error or fraud. While risk assessment procedures alone are not sufficient evidence to support an audit opinion, they aid in determining the nature, extent, and timing of the audit procedures to be performed.

The risk assessment procedures to be performed are as follows:

· Obtain an understanding of the Company, its environment, and its internal control over financial reporting.

· Perform analytical procedures.

· Inquire of the audit committee, management, and others in the Company about the risks of material misstatement.

· Consider information relevant to identifying risks of material misstatement from the client acceptance and retention evaluation, audit planning activities, past audits, and other engagements performed by the Company.

· Conduct a meeting with engagement team members to discuss the risks of material misstatement.

Through these risk assessment procedures, we will assess the risks of material misstatement at the financial statement level as well as the relevant assertion level and to identify any significant risks.

Areas Identified with Significant Risks to Be Discussed:

· Revenue

· Income Tax

· Inventory

· Stock Based Compensation

· PP&E

Use of Internal Audit - Laura

As we conduct our integrated audit, we may consult with the Company’s internal audit function to increase the effectiveness and efficiency of th...

... middle of paper ...

...simplifying the accounting. Each tax jurisdiction will now have only one net noncurrent asset or liability, but will still be prohibited from offsetting deferred tax liabilities from one jurisdiction with deferred tax assets from another jurisdiction. The Company should be aware that the change to noncurrent classification may have a significant impact on working capital.

Available-for-Sale Securities: On January 5, 2016, the FASB issued Accounting Standards Update 2016 -01 concerning financial instruments. As a result of this standard, there will no longer be an available-for-sale classification. Changes in fair values for equity securities will no longer be reported in other comprehensive income. Instead, these changes will run through the income statement. These amendments will be in effect for public entities for fiscal years beginning after December 15, 2017.

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