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Identifying and Assessing the Risks of Material Misstatement Through
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Identifying and Assessing the Risks of Material Misstatement Through
Understanding the Entity and its Environment
Relevant industry, regulatory, and other external factors including the
applicable financial reporting framework
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environment, supplier and customer relationships, and technological development
Example
matters the auditor may consider include market and competition, whether entity is engaged in seasonal activities, product technology relating to the entity’s products
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regulatory environment includes, among other matters, the applicable
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consider include the general economic conditions, interest rates and
availability of financing, and inflation etc
The nature of the entity, including
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types of investments that the entity is making and plans to make,
including investments in special-purpose entities
way that the entity is structured and how it is financed; to enable the auditor to understand the classes of transactions, account balances,and disclosures to be expected in the financial statements
The entity’s selection and application of accounting policies, including
the reasons for changes thereto
The entity’s objectives and strategies, and those related business risks
that may result in risks of material misstatement.
The entity’s objectives and strategies, and those related business risks
that may result in risks of material misstatement