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- This topic has 1 reply, 2 voices, and was last updated 4 years ago by Kim Smith.
- March 4, 2019 at 10:21 pm #507548StevenMember
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Risk 1. Unlisted entity which the family members are all members of the board. This can be seen as not independency and assume as inherent risk?
Risk 2. Also, Unlisted entity growing on the online sales.
This can be seed as ecommerce and control as well as detection risk?
Please let me know!March 5, 2019 at 8:13 am #507638Kim SmithKeymaster
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It would be helpful if you could cite the source of your queries.
Risk 1 – I would have thought that control risk would be higher as the company would not have the independent oversight of non-executive directors/an audit committee, etc.
Risk 2 – I think expanding into online sales could increase inherent risk (e.g. in relation to revenue recognition). Control risk could also be high if controls are not adequate to prevent or detect and correct errors or omissions in the recording of online sales transactions.
Only two components of audit risk are assessed – inherent risk and control risk. Detection risk is managed (not assessed) and must be rendered suitably low to achieve the acceptable level of audit risk.
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