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sir,
if a company is listed on stock exchange, can this be an audit risk? like they have to maintain a minimum level of earnings so theres a risk of manipulation of profits etc… ??It’s an audit risk because if things go wrong with the audit, hundreds or thousands of investors are affected with very adverse publicity. That’s why there are some more stringent requirements when auditing public interest companies (which include listed companies) such rotation of audit partners after a given number of years.
Other audit risks arise from a pressure to perform. If a company does not do as well as is forecast the share price drops etc and directors might indeed manipulate profits (think of the recent Tesco scandal). On the other hand, listed companies can probably afford more and better staff to look after their accounting system and really have to comply with the corporate governance code to avoid sanctions by the stock exchange.
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