The auditor must have a good understanding of the risks associated with the client, the...
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Accounting
The auditor must have a good understanding of the risks associated with the client, the type of business, and the clients accounting system. For each of the following factors, indicate whether they affect primarily business risk (B), inherent risk (I), or control risk (C) of the client.
Factor
Risk
Management integrity.
Possibility of litigation against the auditor.
Internal control structure.
Motivation of management to misstate the financial statements.
Accounting knowledge of the clients controller.
Quality of the internal audit function.
Users understanding of auditor responsibilities.
Complex accounting transactions on leases.
Sophistication of the accounting system.
Client understanding of the auditors responsibilities.
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