Strategic Business Inherent Risk Assessment and Preliminary

Question: Discuss about the Strategic Business Inherent Risk Assessment and Preliminary. Answer: Introduction: In the context of auditing, the inherent risk implies a risk of misstatement in the financial statement without taking into account the controls. The entity lay down the controls on various business processes to reduce the risk of misstatement in the financial statements, which are not considered by the auditor at the time preliminary assessment of the audit risk (Johnstone, Gramling, and Rittenberg, 2015). This preliminary assessment of the audit risk is known as inherent risk. The assessment of the inherent risk is made at the financial report level and at the particular account balance level. The assessment of inherent risk at the financial report level takes into account the broad view as to what could go wrong at the higher management level in finalising the financial statements (Johnstone, Gramling, and Rittenberg, 2015). There are various factors that affect the assessment of the inherent risk at the financial report level as discussed below: Integrity of the Management The managements integrity is crucial matter for the organisations reputation. If the management of an organisation is dishonest, the auditor is likely to assess the inherent risk high (Delaney and Whittington, 2012). On the other hand, if the management is integrate; the auditor would assess the inherent risk low considering less possibility of manipulation in the financial statements. Thus, the lack integrity of the management would increase the risk of misstatements in the financial statements. The Experience and Knowledge of the Board of Directors The experience and knowledge possessed by the board of directors of a company is another factor that contributes to the assessment of the inherent risk at the financial statement level (Delaney and Whittington, 2012). The auditor need to give due consideration to the experience and knowledge level of the board of directors of the company, the supreme management authority, while assessing the inherent risk at the financial report level. This is because the inexperienced people or novices in the board can easily be caught up by the swindlers. Thus, if the people in the board of directors are inexperienced or lacks in knowledge, it is more likely that the auditor assesses the inherent risk high than usual (Delaney and Whittington, 2012). Changes in the Composition of the Board of Directors This is perhaps the most crucial factor that the auditor is required to take into account while assessing the inherent risk. A substantial and sudden change in the composition of the board of directors is an indication of something wrong in the entity. Thus, if the auditor, prior to conduct the audit, comes across of any substantial change in the board in the recent years, the inherent risk should be assessed high (Johnstone, Gramling, and Rittenberg, 2015). Nature of Business and Industry Conditions The nature of business could also affect the assessment of the inherent risk. For example, a new venture with different business processes like internet companies are more prone to the inherent risk. Further, the industry conditions such as increase in the competition in the market could create usual pressure on the management. The management may tempt to manipulate the financial statements and window dressing to impress the investors in such situations (Young, 2003). Political and Regulatory Environment The political and regulatory together affect the assessment of the inherent risk. For example, the changes in the regulatory regime in the telecom sector in Australia affected the entire industry. Thus, the changes in the regulations, which are likely to have adverse impact on the business of the company, also enhance the degree of inherent risk (Young, 2003). The strategic business risk assessment is the process of identifying the circumstances that could lead to potential hazard to the business and providing for the safeguard against those circumstances. In the present scenario, the organisations are adopting very comprehensively risk assessment mechanism that takes into account the internal as well as external risk factors (Fraser and Simkins, 2009). The internal risk factors cover the circumstances related to the internal processes and business environment of the company. Further, the external factors relate to the environment outside the company, for example, the political conditions, regulations, and geographical conditions. Among the above discussed risk factors, the factors pertaining to the management and nature of business are could be identified during internal risk assessment. Further, the risk factors pertaining to the political and regulatory environment are likely to be identified during the external risk assessment (Curtis and Cary, 2012). Factors of Inherent Risk Assessment at the Account Balance Level The auditor is required to maintain highest level of quality in auditing and assurance services. In order to maintain the highest level of quality, the auditor should assess the risk material of misstatements, which includes the inherent risk, at the accounts balance level (Puncel, 2007). The risk of material misstatement at the account balance level is about confirming that the account balances shown in the financial statements are true and correct. Thus, the auditor is required to verify various assertions in respect of the account balances and classes of transactions. Such assertions are existence, occurrence, completeness, and classifications of the transactions and account balances. In verifying these assertions, the auditor should pay due regard to various risk factors as discussed below: Complexity of Transactions The auditor may observe the financial transactions a little bit complex in the special nature business entities as compared to the normal business entities. In the fast developing business environment, it is possible that an entity may have the special financial arrangements making it really difficult for the auditor to evaluate their impact on the financial statements. Thus, the auditor should have due regard to the level of complexity of the transactions (AU Section 312, 2006). The higher the level of complexity adjudged by the auditor higher will be the assessment of inherent risk. Accounting System The accounting system employed by the entity is also a major factor in assessing the inherent risk at the account balance level. In this regard, the auditor should verify that whether the entity has accounting system in place that commensurate with its size and the nature of business. If the accounting system does not commensurate with the size of the entity and nature of its business; the auditor should assess the inherent risk high (AU Section 312, 2006). Subjectivity Involved in Accounting The accounting transactions and balances that involve managements judgment are more prone to misstatement. The accounting transactions such as determination of the useful life of the depreciable assets and selecting the method of depreciation depend upon the managements judgment. The more there is scope for management judgment, the more will be the inherent risk assessed by the auditor (AU Section 312, 2006). Susceptibility of Misappropriation The auditor should cover here the factors such as skills of the staff, instances of circumvention of the authorities in the past, and the overall structure of the concern. Considering these all factors if the susceptibility of misappropriation is higher, the inherent risk should be assessed as high (Johnstone, Gramling, and Rittenberg, 2015). Cut off Transactions The cut off transactions refers to the transactions occurring at the end of the accounting period. The auditor should pay attention to the past records and also refer to the previous audit reports to identify the volume and the nature of transaction that occurred at the end of the accounting period (Johnstone, Gramling, and Rittenberg, 2015). Assessment of Going Concern The financial statements of an entity are prepared based on the fundamental accounting assumption of going concern (IAS 570, 2016). The assumption of going concern implies that the financial position of the company appears adequate and the entity is not going to liquidate its assets in the near future. The management of the company has to explicitly state that the financial statements have been prepared on the basis of going concern assumption and the role of the auditor is to verify the appropriateness of this statement of the management. In verifying the appropriateness of the managements statement the auditor should take in to account the significant events and transactions that impair the ability of the organization to continue as a going concern (IAS 570, 2016). Based on the analysis of the significant events and transactions, the auditor should assess the risk of going concern as high, low, or medium. The assessment of the risk pertaining to the going concern is crucial in drawing audit opinion, thus, the auditor should maintain professional skepticism while verifying the appropriateness of the going concern assumption (Dagwell, Wines, and Lambert, 2011). The auditor should consider the following events or transactions while verifying the appropriateness of the going concern assumption: Financial Events The auditor should be alert while verifying some of the important items of the financial statements such as net worth, debt liability, and operating cash flows. Further, the key financial ratios such as debt equity ratio and current ratio also need to be considered by the auditor. The events such as negative net worth, negative operating cash flows, adverse debt equity ratio and current ratio increases the risk of going concern (Flood, 2014). Non Financial Further, the non financial conditions such as managements intention to liquidate the business operations in the near future, key changes in the management, and loss of major market share also contributes the risk of going concern. Further, the other events such as major non compliances with the laws and regulations, major change in the laws, and emergence of the highly successful competitors in the market also increases the risk of going concern. Therefore, the auditor should be updated with the legal and regulatory environment in which the company operates (Kan, 2013). Assessment of Going Concern Risk of OneTel The going concern risk in respect of OneTel has been assessed as high based on the identification and analysis of the following events: OneTels major operations are in Australia as depicted from the fact that 64% of the worldwide revenues come from Australia (OneTel Case, 2001). Therefore, it is essential to analyze the prevailing conditions in the Australian telecommunication industry. In this regard, it has been observed that competition is increasing rapidly and the revenues of the existing telecom companies like OneTel are decreasing. Further, there have been changes in the industry regulations in respect of licensing arrangement, which are also affecting the existing companies adversely. These adverse changes in the market regulations and sudden increase in the competition can be perceived to be increasing the going concern risk of OneTel. OneTel incurred huge operating losses amounting to $262.40 million in the financial year 2000 (OneTel Case, 2001). The financial performance of the company went down drastically in the year 2000, which casts significant doubt on the going concern. Further, due to losses being incurred by the company, the dividend paid out to the shareholders also went down to $0.10 million from $3 million (OneTel Case, 2001). This reduction in the dividend also contributes to the risk of going concern. The payment to suppliers was $328.10 million in the year 1999, which increased sharply to $684.80 million in the year 2000 (OneTel Case, 2001). The sharp increase in the payment to suppliers shows that the suppliers have discontinued giving material on credit to the company. The shift from the suppliers from credit to cash based delivery of material shows the reduction in their confidence in the company. The lost confidence of the suppliers enhances the risk of going concern. The operating cash flows of the company have gone negative. The company is facing negative operating cash flows since last two years. Further, in order to maintain liquidity, the company has borrowed a significant amount in the current year. Further, the total debt of the company has reached to $490.70 million in the year 2000 from $163 million in the year 1999 (OneTel Case, 2001). The significant increase in the debt and negative cash flows from operations indicates high risk of going concern. References AU Section 312. 2006. Audit risk and materiality in conducting an audit. [Online]. Available at: https://www.aicpa.org/Research/Standards/AuditAttest/DownloadableDocuments/AU-00312.pdf [Accessed on: 06 September 2016]. Curtis, P. and Cary, M. 2012. Risk Assessment in Practice. [Online]. Available at: https://www2.deloitte.com/content/dam/Deloitte/global/Documents/Governance-Risk-Compliance/dttl-grc-riskassessmentinpractice.pdf [Accessed on: 06 September 2016]. Dagwell, R., Wines, W., and Lambert, C. 2011. Corporate Accounting in Australia. Pearson Higher Education AU. Delaney, P.R. and Whittington, O.R. 2012. Wiley CPA examination review, outlines and study guides. John Wiley Sons. Flood, J.M. 2014. Wiley GAAP 2015: interpretation and application of generally accepted accounting principles 2015. John Wiley Sons. Fraser, J. and Simkins, B. 2009. Enterprise risk management: today's leading research and best practices for tomorrow's executives. John Wiley Sons. IAS 570. 2016. International standard on auditing 570 (revised) going concern. [Online]. Available at: https://www.nba.nl/Documents/Wet-%20en%20Regelgeving/Adviescollege%20voor%20Beroepsreglementering/naar%20een%20uitgebreide%20controleverklaring/ISA%20570%20(Revised).pdf [Accessed on: 06 September 2016]. Johnstone, K., Gramling, A., and Rittenberg, L.E. 2015. Auditing: a risk based-approach to conducting a quality audit. Cengage Learning. Johnstone, K., Gramling, A., and Rittenberg, L.E. 2015. Auditing: a risk based-approach to conducting a quality audit. Cengage Learning. Kan, E. 2013. Audit and assurance - principles and practices in Singapore (3rd edition). CCH Asia Pte Ltd. OneTel Case. 2001. Strategic Business Risk Assessment, Inherent Risk Assessment and Preliminary Going Concern Assessment. Puncel, L. 2007. Audit Procedures 2008. CCH. Young, M.R. 2003. Financial reporting handbook. Aspen Publishers Online.

The protection and support of children free essay sample

This applies to challenging behavior due to the fact it focuses on the protection and support of children. An example of this could be Article 18 (parental responsibilities and state assistance) This articles states that it is the parents responsibility to make sure that they always consider what is best for their child and the government should help them by creating support services for the child and giving a hand to parents in need. Article 39 (recovery from trauma and reintegration) One of the reasons for challenging behavior could be some past experiences. This article states that children who have experienced trauma or things like that should get special support in order for them to recover. The Childrens act This Act aims to encourage childrens wellbeing by improving effective local workings; it focuses on childrens health, safety, achievements etc. This act applies to challenging behavior due to the fact that it is put in place to observe the child/ children and to resolve any issues/problems as soon as possible. We will write a custom essay sample on The protection and support of children or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page As well as that, it encourages children to be safe and achieve more i. E. Schools, teachers have to ensure that they give the child full help/ support in order for the child to achieve hes potentials and also for the safety of other students Every Child Matters This legislation links with the Childrens Act. It is put in place in order to ensure that children who are at risk of harm or neglect are protected and encourages children to gain their full potentials. Every Child Matters tries to promote safety i. E. By reducing crime and educational failure etc.

FaceBook Essay Example

FaceBook Essay Example FaceBook Essay FaceBook Essay However, in this day and age, social media has aided in the lack of personal contact the public has with each other, resulting in poor communication skills. Nowadays when you think of communicating with loved ones, there is the phone, mail, face to face contact and Faceable. This social media website has opened doors to long distance communication. If your friend in California posts a picture, you see it right away instead of waiting for the mail service to deliver it days later. Many some that offer exclusive Faceable Discounts. Another great feature is the reminders of birthdays and events, such as a baby shower or Marci Grass party. Its great to invite everyone at once and get a response from each on one page. According to Mikado et al. , (2010), the argument is that online communication may help adjustment because young people can use online communication as yet another place to interact with existing friends and meet others. Communication on the internet and face to face are two different behaviors, but how do you know when the line is crossed? Faceable and Communication 3 Michael Bogeyman, the President of RPR Solutions published an article that says many people feel that Faceable can cause increased antisocial tendencies, because people are not directly communicating with each other. Especially in teens and young adults, there is an obsession of Facilitating others profiles instead of using face to face communication. There seems to be a lacking verbal communication trend, also. Many teenagers and adults speak to each other like they are typing something. Lol and OMG are some of the examples of the modernized language. Unfortunately, impel spelling is being forgotten. We send our children to kindergarten to learn how to spell and by 12-14, they are spelling you as U, your as our and are is r. There are tons of abbreviations to words on Faceable. It is like a new language has been created. Due to this spelling issue, many children are getting lower grades in school. According to the United Kingdom news site, Telegraph. Co. UK, teachers believe that abbreviations used on Faceable, Twitter, etc. Are making their way onto students homework, tests and write ups and its hurting their grades. A lot of real life communication is based on verbal acts and body language. Many students and their peers are losing the ability to socially interact, face to face. Pretty soon, they will not be able to read others body languages. Faceable started out as a website dedicated to student to student interaction. It has become such a distraction to students social lives. Also, 4 a lot of students are potentially getting poor grades due to multitasking, trying to study while Beckoning. Future employers will be witnesses to employees who do not know how to communicate successfully. They will not be able to hold a conversation, make eye contact, etc. There are movies made that are based in the future and it shows everyone sitting in front of a computer, with computerized clones running around. That is a scary yet realistic future if we dont step back and realize that social media is hurting us. In conclusion, Faceable has its pros and cons. However, when it comes to communication skills, there are more cons. Verbal and non verbal communication are lacking, in the real world. Many people dont go out for coffee with friends; they hose to interact over the internet instead.

How to Use a Volumetric Flask

How to Use a Volumetric Flask A volumetric flask is a piece of laboratory glassware that is used to prepare and measure chemical solutions. It is used to make up a solution to a known volume. Volumetric flasks measure volumes much more precisely than beakers and Erlenmeyer flasks. How to Recognize a Volumetric Flask A volumetric flask is characterized by a bulb and a long neck. Most volumetric flasks have flattened bottoms so that they can be placed on a lab bench or other surface, though some volumetric flasks have rounded bottoms and must be handled with special protective equipment. How to Use a Volumetric Flask To prepare a solution in a volumetric flask, follow these steps: Measure and add the solute for the solution.Add enough solvent to dissolve the solute.Continue to add solvent until you near the line marked on the volumetric flask.Use a pipette or dropper to fill the volumetric flask, using the meniscus of the solution and the line on the flask to determine your endpoint.Seal the volumetric flask and invert it to thoroughly mix the solution.

The Major Effects of the Recent Japanese Earthquake and Tsunami on the Essay

The Major Effects of the Recent Japanese Earthquake and Tsunami on the Wold Economy - Essay Example This study aims at gaining insights into the impacts of Japanese tsunami and earthquake upon the global economy especially the East Asia (Isidore, 2011). The Main Focus It is noted that Japan was facing certain kinds of structural pressures before the earthquake and the tsunami took place. The main problem with the country was related to the ageing workforce and the nonexistence of the immigration of the workers for long-term. It is the workforce growth that can lead to the economic growth of the country and thus Japan was facing the problem of slow growth potential in the near future. The country also is also facing the burden of heavy public debt in the industrial world. The immediate recovery of Japan after such disaster took place has been an issue of concern. However, it can be noted that Japan has been one of the wealthiest countries; moreover, the country’s government along with the households and the businesses have the necessary resources to rebuild and thus recover f rom such disasters. In the country of Japan, since the nuclear plant was damaged to a great extent, therefore it was expected that the transportation system, as well as the infrastructure, would interrupt the flow of the gasoline, oil, water and other inputs into the process of production. When such disruption takes place, then it affects the other industries such as manufacturing and services as well. It was further expected that the economy of Japan in the second quarter of 2011 would contract. However, it was further predicted that the country’s situation would show certain improvements in the third and the fourth quarter of the year 2011 because of the restructuring efforts made by the government through its spending (Beckman, 2011). The above paragraph has been related to the impact of the Japanese earthquake and tsunami on the country of Japan. However, now it is quite significant to understand the impact of such disasters on the overall world economy. 7 percent of the world’s output is contributed by Japan. However, the main point to be noted in this regard is that its contribution towards the growth of the overall economy has been quite less. The reason behind this is that of the trade surpluses in Japan. It has been expected by the analysts that the global economy would surely expand at a rapid pace by more than 3 percent in 2011. When the broad global (Gross Domestic Product) GDP is taken into consideration, then it can be mentioned that the effects of such disasters seem to be minimum. However, some of the countries may face the impact of such earthquakes and tsunamis of Japan in their countries. It has been evident that in Asia most of the countries depend upon Japan so that they can keep their plants operating. This can be explained with the help of an example. South Korea imports around 25 percent of the industrial parts from Japan. Therefore, if there is a long-term delay in the shipment of the goods from Japan, then it might affec t the production as well as the economic growth of that particular country. It was further apparent that the developing countries in the continent such as Latin America had indirect effects via wider impacts upon the global economic growth. Latin America does not have much of the trade links with Japan since China’s presence is increasing in the region. Latin America exports less than three percent of its total export sales to Japan.  

The Conservative’s Right to Buy policy has changed the quality Essay

The Conservative’s Right to Buy policy has changed the quality and quantity of local authority housing beyond all recognition. Discuss - Essay Example But the scenario changes when the government of a country makes it easier and affordable for the people to buy houses. An example is the introduction of the ‘Right to Buy Policy’ (RTB) introduced by the Conservative government in the UK (later to become part of the Housing Act 1985 as sections 188 to 188). This paper is a review of the positive and negative effects of the policy and whether it has changed the quality and quantity of local authority housing beyond all recognition. The right to Buy scheme was first introduced in 1980 and the policy aims at â€Å"at secure tenants of local authorities (councils) and those assured tenants of registered social landlords/housing associations who previously held secure tenancies with local authorities. It is open to virtually any secure tenant who can afford to buy† (Communities and Local Government). Relatively high levels of discounts were also provided for the tenants if they intended to exercise their rights to buy. Several changes in legislation have taken place over the years and it is not intended in this paper to go into its details. The primary purpose as mentioned earlier is to understand its effects and repercussions. It is clear from published literature and facts that the policy did have an enormous impact on the housing sector in the country. According to the Guardian newspaper, as of 2003, nearly 1.5 million homes have been purchased by tenants and the level of ownership has risen from 55 to 7 0%. (Weaver 2003). The figure for Scotland in 2006, according to Communities Minister Malcolm Chisholm was 67%. Balchin and Rhoden quoting Hamnett state that the near dormant housing sector radically changed gears within ten years of the introduction of the policy. The housing sector was not very dynamic for nearly half a century prior to its introduction (Balchin &Rhoden 2002, p. 10). There are more words of praise and appreciation. In the book

Marketing demographics Essay Example for Free

Marketing demographics Essay The profile for the potential customers of Bob Bicycles consists of the following geographic, demographic, and behavioral factors: It is said that the immediate geographic target of the company is London. In terms of demographics, the company’s market segment includes male and female whose age ranges from 25 above. In a study conducted, it is noted that commuter cycling in the city is mainly dominated by white males with ages ranging from 25-44; this is because women is facing more barriers in cycling than men (See Figure 2). Most cyclists are also employers and employees who have seen the benefits of cycling with their health, economic and personal factors. As can be seen, children are not considered as a potential market since London is not allowing children to use bicycle for transport. Aside from this, other factors to be considered in the demographics of the potential customers of Bob includes the levels of bicycle usage, reasons for use, behavioral factors and geodemographic factors. Figure 2 Profile of Commute Cyclists 2006-2007 Behavior Factors. In terms of behavioral and cultural aspects, it can be said that Bob bicycles can be considered to have a big potential in London because of the high quality bicycles of Bob which meets the current trends in the bicycle market. In addition, there is a value attributed to the used of bicycle as a means of transport. There are various attitudes to cycling that should be considered by Bob in the London market (See figure 3). This result was based on the study conducted by TFL Omnibus Survey in 2007. Most of the perception of the individuals with regards to cycling is its economic, personal and health benefits. Figure 3 Attitude towards Cycling. Based on the analysis, it can be said that Bob’s plan of expanding his business in the London market, is very feasible and potential based on the current trends in business environment and the pool of demographics and potential target markets. Reference Automatic Traffic Count Data (2007). London Travel report 2007, 2007, TfL. Online available http://www. tfl. gov. uk/assets/downloads/corporate/London-Travel-Report-2007-final. pdf. Retrieve October 6, 2008. Heywood, C (2004). The Near Market for Cycling in London. Online available at http://www. tfl. gov. uk/assets/downloads/businessandpartners/cycling-market-report. pdf.retrieve October 6, 2008 Cycling Action Plan (2004). Creating a chain reaction The London Cycling Action Plan. Online available http://www. tfl. gov. uk/assets/downloads/businessandpartners/cycling-action-plan. pdf. Retrieve October 6, 2008 Cycling and Motorbikes (2008). Online available at http://www. bbc. co. uk/london/content/articles/2005/06/14/cycling_inlondon_feature. shtml. Retrieve October 6, 2008 Synovate Ltd (2008). TfL Omnibus attitudes to cycling, 2007, Synovate. Online available http://www. tfl. gov. uk/assets/downloads/businessandpartners/cycling-training-effectiveness-results-summary-2008. pdf. retrieve October 6, 2008.