RSM423H1 Lecture 7: Lecture 7
Document Summary
Judgemental errors: accounting risk, uncertainty about future. 1. 00 (prob of payoff + prob of no payoff = 1) Pmm = accounting risk + (1 accounting risk) * audit risk. Accounting perspective: revenue: 700 + 900 = 1600, cogs: 600 + 800 = 1400, profit: 200. Contingency accounting: if you sell a horse for a lottery ticket, you cannot recognize the profit: revenue: 900, cost: 1400. Fair value accounting (ifrs13 b28: revenue: 2100 + 900 = 3000, cost: 1400, profit: 1600. Rbr re: acceptable acr = 0. 3, matrix, r1, 0. 7, r2, 0. 3, r3, revenue: 2800 + 900 = 3700, cost: 1400, profit: 2300. Aug 41 30 in slide 25 of class 6-8 slides. Audit guideline says 110 - (cid:1005)(cid:1007)(cid:1004)k is (cid:373)isstate(cid:373)e(cid:374)t ra(cid:374)ge (cid:1006)(cid:1004)k is (cid:373)isstate(cid:373)e(cid:374)t. Assu(cid:373)e (cid:373)aterial (cid:373)isstate(cid:373)e(cid:374)t (cid:894)mm(cid:895) = (cid:1005)(cid:1009)k ha(cid:448)e a (cid:373)aterial (cid:373)isstate(cid:373)e(cid:374)t. Assignment 2: set a reasonable range of impairments (do research and forecast to set the range) Co(cid:272)k(cid:271)ur(cid:374)"s pro(cid:271)le(cid:373): (cid:449)hat happe(cid:374)s if the ra(cid:374)ge is too (cid:449)ide.
