Loose-leaf For Auditing & Assurance Services: A Systematic Approach
11th Edition
ISBN: 9781260687637
Author: William F Messier Jr, Steven M Glover Associate Professor, Douglas F Prawitt Associate Professor
Publisher: McGraw-Hill Education
expand_more
expand_more
format_list_bulleted
Question
Chapter 4, Problem 4.32P
A
To determine
Introduction: Business risk refers to the risk which may affect the profit earning capacity of the firm due to unforeseen circumstances which may appear in the near future.
To describe: Business risks that NS, a bio-tech firm is likely to face being a start-up company.
B
To determine
Introduction:Business risk refers to the risk which may affect the profit earning capacity of the firm due to unforeseen circumstances which may appear in the near future.
To describe: The effect of management risk on the decision of the auditor to accept the firm as a client
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
You are the external auditor of Suleman and Stock Ltd. The CEO, Ahsan Suleman, has contacted you because the company is considering setting up an internal audit department for the first time and he is looking for some guidance as to what is required for an effective internal audit department.
Required:
Explain the key considerations Ahsan Suleman should consider when setting up an internal audit department.
ou are an investment banker performing due diligence on a potential acquisition for a financial buyer. For this particular transaction, the ability of the acquisition target to continue operations in severe weather is critical for profitability and the transaction’s success. As part of your due diligence you would most likely review which of the following reports?
1. SOC 1
2. PCI Compliance
3. SOC 2
4. SOC for cybersecurity
You are a senior manager in the audit department of Raven & Co. You are reviewing three situations which have arisen in respect of audit clients, which were recently discussed at the monthly audit managers' meeting:Grouse Co is a significant audit client which develops software packages. Its managing director, Max Partridge, has contacted one of your firm's partners regarding a potential business opportunity. The proposal is that Grouse Co and Raven & Co could jointly develop accounting and tax calculation software, and that revenue from sales of the software would be equally split between the two firms. Max thinks that Raven & Co's audit clients would be a good customer base for the product. Plover Co is a private hospital which provides elective medical services, such as laser eye surgery to improve eyesight. The audit of its financial statements for the year ended 31 March 2012 is currently taking place. The audit senior overheard one of the surgeons who performs laser…
Chapter 4 Solutions
Loose-leaf For Auditing & Assurance Services: A Systematic Approach
Ch. 4 - Prob. 4.1RQCh. 4 - Prob. 4.2RQCh. 4 - Prob. 4.3RQCh. 4 - Prob. 4.4RQCh. 4 - Prob. 4.5RQCh. 4 - Prob. 4.6RQCh. 4 - Prob. 4.7RQCh. 4 - Prob. 4.8RQCh. 4 - Prob. 4.9RQCh. 4 - Prob. 4.10RQ
Ch. 4 - Prob. 4.11RQCh. 4 - Prob. 4.12RQCh. 4 - Prob. 4.13MCQCh. 4 - Prob. 4.14MCQCh. 4 - Prob. 4.15MCQCh. 4 - Prob. 4.16MCQCh. 4 - Prob. 4.17MCQCh. 4 - Prob. 4.18MCQCh. 4 - Prob. 4.19MCQCh. 4 - Prob. 4.20MCQCh. 4 - Prob. 4.21MCQCh. 4 - Prob. 4.22MCQCh. 4 - Prob. 4.23PCh. 4 - Prob. 4.24PCh. 4 - Prob. 4.25PCh. 4 - Prob. 4.26PCh. 4 - Prob. 4.27PCh. 4 - Prob. 4.28PCh. 4 - Prob. 4.29PCh. 4 - Prob. 4.30PCh. 4 - Prob. 4.31PCh. 4 - Prob. 4.32P
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Similar questions
- You have been approached by the financial institutions DatabankFinancial Services Limited and Blackstar holdings limited to be theirauditors.a. Iterate the factors that can heighten ‘engagement risk’ as auditorsfor either of this companies and what kind of information youwill require to guide your decision.b. Assuming you consider a risk-based strategy as an effective auditstrategy for executing your mandate, what are the probable areasof risk you will focus on and how will you test for them?arrow_forwardPlease answer this. Thank you! Name one company (which can be a publicly listed, public company, registered issuer, non-stock, non-profit corporation, partnership, sole proprietor, and yes, even the sari-sari store of your neighbor), and illustrate the inter-relationship of Governance, Risk Management, and Control in your chosen company. Moreover, you may opt to design a simple one-line audit plan on how will you evaluate the Governance, Risk Management, and Control of your chosen company.arrow_forwardYou've been assigned to the risk advisory department at the CPA firm of Debits & Credits. You are planning an annual IT Audit at your client. Which of the following will most influence the planning and scope of your engagement? 1) Applicable regulatory requirements 2) Applicable corporate standards 3) Applicable industry good practices 4) Organizational policies and proceduresarrow_forward
- Assume that have recently been appointed as a member of the Financial Risk Management team of your organisation. For the purpose of this research paper, select a company of your choice, in Zambia or an international firm and evaluate how well the company manages its financial risk by addressing the following issues. Identify and explain the main financial risks the company is exposed to and explain the methods you used to identify the financial risks. In reference to the financial risks identified part (1) above, make recommendations to the company whether it should hedge 100% of the risks, or part of the risk or none at all. Give justification for each of your recommendations. Assume you recommend some hedging in part (2) explain the specific hedging strategies (internal or external) the company will apply to mitigate the specific financial risks.arrow_forwardThe SEC is trying to get companies to notify the investment community more quickly when a "material change" will affect their forthcoming financial results. In what sense might a financial manager be seen as "more ethical" if he or she follows this directive and issues a press release indicating that sales will not be as high as previously anticipated?arrow_forwardanswer must be in table format or i will give down votearrow_forward
- You are a CPA who has been hired by DEF Company to assist with their initial public offering. Prepare a memo to the president of DEF outlining the steps you will take to launch the IPO.arrow_forwardselect a “start-up” company in an industry of your choice and provide a brief summary description of the start-up company you chose and the goods or services it provides. 1. As a start-up company, identify three Credit Risks the company currently faces today or could face in the future. Explain in detail why these risks are a threat to the company. 2. What advice would you give to the CEO of the company to prevent or minimize these credit risks?arrow_forwardExplain the ‘audit expectation gap’. What causes the gap? b: Potter and Partners are a chartered accounting firm with offices in capital cities in most states. The head of the business development department is seeking to grow the firm’s revenue from non-audit services. Required: What non-audit services could a chartered accounting firm provide to its listed company clients? Explain why a company would buy these services from its audit firm instead of another consulting firm.arrow_forward
- Imagine that you are a manager in a large entity and need to make a recommendation to the CEO on which tender to accept. The job being put out to tender by the entity is worth millions of dollars, and you have a significant ownership share in one of the companies tendering. Outline the ethical issues to be consideredarrow_forwardQuestion: If you were in Staci’s situation, what would you do? Ethical Dilemma Staci Sutter works as an ana-lyst for Independent Invest-mentBankShares(I2BS),which is a large investment banking organization. Shehas been evaluating an IPO that I2BS is handling for atechnology company named ProTech Incorporated.Staci is essentially finished with her analysis, and sheis ready to estimate the price for which the stockshould be offered when it is issued next week. Accord-ing to her analysis, Staci has concluded that ProTech isfinancially strong and is expected to remain financiallystrong long into the future. In fact, the figures providedby ProTech suggest that the firm’s growth will exceed30 percent during the next five years. For these rea-sons, Staci is considering assigning a value of $35 pershare to ProTech’s stock.Staci, however, has an uneasy feeling about thevalidity of the financial figures she has been evaluating.She believes the…arrow_forward. Independence check. On the following scenarios, determine if the auditor involved has his/her independence impaired. Cite the evidence of independence impairment, identify the threat type, and what safeguard he/she can apply to eliminate or reduce the threat to acceptable low level.• Ben Santos works as a manager in the Manila office of an international CPA firm. His father has just taken a position as a purchasing agent for one of the CPA firm's Manila clients. Has Ben's independence has been impaired? Has the CPA firm's independence been impaired if ben does not work on the audit? Why or why not?• Three months ago, a national CPA firm hired Gary Angeles to work as a staff auditor in its Cebu office. Yesterday, Angeles' father was hired to be the chief financial officer of on the CPA firm's Cebu clients. Has the independence of the CPA firm with respect to this client been impaired?• Alex Ybanez is a CPA who often serves as an expert witness in court cases. It is proper for Ybanez…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Auditing: A Risk Based-Approach (MindTap Course L...AccountingISBN:9781337619455Author:Karla M Johnstone, Audrey A. Gramling, Larry E. RittenbergPublisher:Cengage Learning
- Pkg Acc Infor Systems MS VISIO CDFinanceISBN:9781133935940Author:Ulric J. GelinasPublisher:CENGAGE LBusiness Its Legal Ethical & Global EnvironmentAccountingISBN:9781305224414Author:JENNINGSPublisher:CengageAuditing: A Risk Based-Approach to Conducting a Q...AccountingISBN:9781305080577Author:Karla M Johnstone, Audrey A. Gramling, Larry E. RittenbergPublisher:South-Western College Pub
Auditing: A Risk Based-Approach (MindTap Course L...
Accounting
ISBN:9781337619455
Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:Cengage Learning
Pkg Acc Infor Systems MS VISIO CD
Finance
ISBN:9781133935940
Author:Ulric J. Gelinas
Publisher:CENGAGE L
Business Its Legal Ethical & Global Environment
Accounting
ISBN:9781305224414
Author:JENNINGS
Publisher:Cengage
Auditing: A Risk Based-Approach to Conducting a Q...
Accounting
ISBN:9781305080577
Author:Karla M Johnstone, Audrey A. Gramling, Larry E. Rittenberg
Publisher:South-Western College Pub
Enterprise Resource Planning (ERP); Author: tutor2u;https://www.youtube.com/watch?v=A98X_bvX2QA;License: Standard Youtube License