Assessing Risks of Material Misstatement (3)

Question 1

Changes in (Ec)

Answer 1

Economic conditions - instability (e.g. current devaluation)

Question 2

Changes in (M)

Answer 2

Markets - exposure to volatility (e.g. futures trading)

Question 3

Changes in (C)

Answer 3

Customer loss - going concern / liquidity risk

Question 4

Changes in (In)

Answer 4

Industry model - changes in the industry in which the entity operates

Question 5

Changes in (B)

Answer 5

Business model - change in supply chain, new lines of business

Question 6

Changes in (G)

Answer 6

Geography - expanding into new locations

Question 7

Changes in (En)

Answer 7

Entity structure - for example reorganisations, subsidiaries sold

Question 8

Changes in (IT)

Answer 8

IT environment change / new IT systems relevant to FR

Question 9

Management bias or fraud risk (O)

Answer 9

Opportunities for fraudulent financial reporting

Question 10

Management bias or fraud risk (R)

Answer 10

Transactions with related parties

Question 11

Management bias or fraud risk (N)

Answer 11

Non-routine or non-systemic transactions

Question 12

Management bias or fraud risk (M)

Answer 12

Transactions recorded based on management intentions