BU477 Chapter Notes - Chapter 7: Going Concern, Decision Aids, Audit Risk
Document Summary
Audit: estimate total misstatement in segment, estimate combined misstatement, compare combined misstatement with overall materiality, conclude on overall resonableness of fs, report to those in charge of governance. It is either equal to or less than pm. Materiality for the fs as a whole. Are there items on which the users tend to focus. Nature of the entity and the industry. E(cid:374)tity"s o(cid:449)(cid:374)ership stru(cid:272)ture a(cid:374)d the (cid:449)ay it is fi(cid:374)a(cid:374)(cid:272)ed. Mature entity that is financed by equity (public company with shares widely held) Start-up entity that is financed by equity and has not yet generated net income. Mature entity that is financed by one private equity investor whose n/i is consistently low because the owner/ manager takes much of the income by way of bonus; the entity has some debt financing which requires an audit. Evaluate if organization spending is consistent with objectives of the organization. N/i adjusted for the owner/manager bonus, or total assets.
