Which of the following factors impact the risk of material misstatement at the account level in planning the audit of Eagle? (Several choices may be correct.) There is an expectation that due to slower sales, there may be more inventory on hand at the end of the year. The financial controller of Eagle was dismissed in October and is threatening to sue the company for being unfairly dismissed. There is increased competition in the industry, which puts pressure on management to meet sales targets. In October 2023, the controller was dismissed, and his tasks are being shared between existing staff. This increases the risk of material misstatement as errors may have been made within the accounting records by the overworked finance team members, and there is no one working in a supervisory capacity. Preliminary analytical review of the draft statement of profit or loss has identified a significant fall in administration expenses. One of Eagle's key customers has been experiencing financial difficulties and is taking a six-month payment break. The purchase ledger supervisor left in August, and no reconciliations of supplier statements and the purchase ledger control account have been performed.
Which of the following factors impact the risk of material misstatement at the account level in planning the audit of Eagle? (Several choices may be correct.) There is an expectation that due to slower sales, there may be more inventory on hand at the end of the year. The financial controller of Eagle was dismissed in October and is threatening to sue the company for being unfairly dismissed. There is increased competition in the industry, which puts pressure on management to meet sales targets. In October 2023, the controller was dismissed, and his tasks are being shared between existing staff. This increases the risk of material misstatement as errors may have been made within the accounting records by the overworked finance team members, and there is no one working in a supervisory capacity. Preliminary analytical review of the draft statement of profit or loss has identified a significant fall in administration expenses. One of Eagle's key customers has been experiencing financial difficulties and is taking a six-month payment break. The purchase ledger supervisor left in August, and no reconciliations of supplier statements and the purchase ledger control account have been performed.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:Which of the following factors impact the risk of material misstatement at the account level in planning the audit of Eagle? (Several
choices may be correct.)
There is an expectation that due to slower sales, there may be more inventory on hand at the end of the year.
The financial controller of Eagle was dismissed in October and is threatening to sue the company for being unfairly
dismissed.
There is increased competition in the industry, which puts pressure on management to meet sales targets.
In October 2023, the controller was dismissed, and his tasks are being shared between existing staff. This increases the risk
of material misstatement as errors may have been made within the accounting records by the overworked finance team
members, and there is no one working in a supervisory capacity.
Preliminary analytical review of the draft statement of profit or loss has identified a significant fall in administration
expenses.
One of Eagle's key customers has been experiencing financial difficulties and is taking a six-month payment break.
The purchase ledger supervisor left in August, and no reconciliations of supplier statements and the purchase ledger control
account have been performed.
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