Textbook Notes (270,000)
CA (160,000)
SFU (5,000)
BUS (1,000)
BUS 426 (30)
Chapter 8

BUS 426 Chapter Notes - Chapter 8: Audit Risk, Analytical Review, Risk Assessment


Department
Business Administration
Course Code
BUS 426
Professor
Michael Favere- Marchesi
Chapter
8

This preview shows page 1. to view the full 4 pages of the document.
Chapter 8 - Client Risk Profile and Documentation
Phase 1: Have a clear understanding of the risks of material
misstatement before accepting the client
Phase 2: Develop Client Risk Profile by understanding the client’s
business and industry to access client business risk and to assess
the risk of fraud overall
Understand client’s business and industry
o Internal and External Environment
Risks associated with specific industries may
affect the auditor’s assessment of client business
risk
Certain inherent risks are common to all clients in
certain industries, ex: Obsolete fashion goods
Many industries have unique accounting
requirements that the auditor must understand
o Business Operations and Processes
Auditor should understand the client’s major
source of revenue, key customers, major
suppliers, etc.
Tour of the office and plant
Identifying related parties to see if they are arms
length
Examining the client’s technology infrastructure
o Management and Governance
Legal documents to examine: Articles of
incorporation, bylaws, minutes of board of
directors and shareholders, contracts and code of
ethics
Articles of Incorporation: Documents
that recognizes a corporation as a separate
entity
Bylaws: The rules and procedures adopted
by a corporation’s shareholders, including
the corporation’s fiscal year and duties of
management
Consider the quality of management
o Objectives and Strategies
Understand the client’s objectives related to
reliability of financial reporting, effectiveness and
efficiency of operations, compliance with laws and
regulations
o Measurement and Performance
Understand what the client uses to measure
performance
You're Reading a Preview

Unlock to view full version