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Hello Mike,
I am reading the course note, and it mentions that inherent risk can be increased by a pressure to perform (which may mean that some staff members who have optimistic view of sales and cost).
Why? Does it mean that material misstatement could occur when management set a high target of sales initially? and in order to make sure they achieve the target set, they try to manipulate the sales figures?
Thank you.
Regards,
Marthew
When management set high targets, the staff that are employed by management may feel that their jobs could be at risk if they miss the target, or that their promotion depends upon achieving these targets
You could almost view it as an incentive to manipulate figures in order to keep management happy
Is that OK for you?
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