[CIWWI]

Ok got it.. What is meant by risk is at the fs level and not assertion level?

[CIWWI]

okay! what is the difference between assesment of risk and response to risk?

[CIWWI]

2.risk – The year?end financial statements have to be prepared by the end of September 20X5 in order to secure bank finance and management wish to report strong results

response- The audit engagement team should maintain professional scepticism throughout the course of the audit.
Detailed cut?off testing on areas such as revenue, inventory and payables should be performed to ensure that cut?off has been correctly applied and substantive procedures performed on estimates and judgments to ensure accuracy

here only the first point that is to maintain proofessional sceptism is enough to score full marks or i sjould write all the points?

[CIWWI]

ohhh got it! thank you 🙂

[CIWWI]

but above you have told (i mean u agreed to it) tht reduced FC is “MORE” sensitive

no i havent watched your leacture sir, i had coaching in my college

[CIWWI]

If the fixed cost element is reduced then wont the profit be more sensitive to sales volume?

u have answered this as its correct

sir but isnt it if fixed cost element tht is operation gearing is high, a small % percentage in level sales could result in greater % changes in pbit

can u plz clarify it sir
thank you sm 🙂

[Author]

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