Risk Assessment Objective (3) Flashcards
What does ISA 315 distinguishes?
Risks at financial statement level and assertion level
What are risks at the financial statement level?
Pervasive to the financial statements and may affect any assertuin
Example of risks at the financial statement level?
The effects of a poor management attitude to internal control could be felt in any area of the financial statements
What are the risks at the assertion level?
More specific and will take the form of specific issues
Example of risks at assertion level
Company keeps inventory in multiple locations will be subject to inherent risk that not all inventory will be counted
What may keeping inventory in multiple locations will be subject to inherent risk that not all inventory will be counted cause?
A control risk in relation to entity’s system for counting that inventory
What must auditors obtain to assess these risks (environment)
The entity and its environment
What must auditors obtain to assess these risks (framework)
The applicable financial reporting framework
What must auditors obtain to assess these risks (control)
The entity’s system of internal control
