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hi ,
i read in the technical article that forensic investigation for an audit client is self review threat. how does such an amount come in fs ? under which category ?
I’m not sure what you are asking (which category?) – self-review/self-interest/familiarity/intimidation/advocacy are the 5 categories of threat.
If forensic investigation concerns theft of cash/inventory, for example, the amount of the loss (determined by the forensic investigator) will presumably be included in the financial statements – so if the auditor was also the forensic investigator there will be self-review threat.
i meant in what section in FS. Do we write off those items as expenses if a theft happened ?
Loss of cash as an expense below any gross profit – if material it might be separately disclosed (IAS 1).
SInce the loss of inventory is automatically expensed in cost of sales (by virtue of the relationship cogs = op inv + purcahases – cl inv), there might be a journal adjustment Dr Inventory write-off (shown separately) and Dr Cogs.
Doesn’t matter if it’s theft/fire/flood – if an asset has gone it can’t be kept in SoFP.
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