What are the inherent risks related to the valuation assertion for options/warrants related to equity. Please use the illustration below to help you answer this question. **Assertion and Inherent Risk in Financial Reporting****Existence**- Issuances or sales are not authorized in accordance with the organization’s bylaws.- Proceeds are not received.- Stock issuances or sales are recorded in the wrong period.**Valuation**- Stock issued in exchange for goods or services is not properly valued.**Presentation and disclosure**- Equity activities are not properly disclosed in accordance with GAAP.**Completeness**- All stock repurchased is not recorded as treasury stock.- Treasury stock transactions are recorded in the wrong period.**Valuation**- The cost of treasury stock that is subsequently retired is not properly allocated among the appropriate accounts.**Existence**- Dividends may be recorded and paid before being declared.- Dividends may not be properly approved before being declared.- Dividends are recorded in the wrong period.**Existence**- Options/warrants are granted without being properly approved.- Inadequate records as to options/warrants issued but not exercised.**Rights/obligations**- Options exercised or expired remain on the organization’s books.**Valuation**- Option/warrant grants are not properly valued due to inappropriate assumptions or models.- Inappropriate amortization methods are used.- Inaccurate period of service is used.This table details various assertions and the corresponding inherent risks associated with financial reporting, particularly related to issuances, valuations, and stock transactions. Each row defines a potential risk which could impact the accuracy and reliability of financial statements if not properly managed.

Inherent risk refers to the risk which is presented through the omission as well as error in the (FS) financial statement of the business and it is because of the factor other than the internal control failure. Valuation assertion is one of the assertion which refers to the liabilities, assets as well as equity balances have been properly valued. The inherent risks which are related to assertion of valuation for options are: The error which could occur in financial statement of the company is that the stocks of the company that are exchanged against goods and services which are not valued. Another risk could be that the treasury stock cost which is not allocated properly among its respective accounts. In relation to various as well as inappropriate assumptions or models, the options grants are not properly or accurately valued. The method of amortizations are used appropriately. The period of service is not accurately used. Example, time period basis under finance is determining the average profits which is generated through companies during the period of lower or higher than the normal profitability. So, if the the service period is not properly used than it might results into inaccurate valuation of the company profitability.