when is going to design and implement overall response to address the assessed ROMM then “In designing audit procedures WHY AUDITOR SHALL consider the reason for the assessment given to the risk of material misstatement at the assertion level for each class of transaction account balance and disclosure ”
WHAT IS THE MEANING OF “AUDITOR SHALL CONSIDER THE REASON FOR THE ASSESSMENT GIVEN TO ROMM”
Sorry for late reply, i was out of town for a week.
Ok So basic focus is “Reason for assessing RMM”
RMM can arise because of many reasons , it can be because of excess cash receipts leading to risk of misappropriation / quality of raw material like coal is difficult to determine / godown staff is known for misappropriations / no supervisor for 9 months in a year on godown / complexity of computations / no appropriate internal control system….. etc so that we design appropriate procedures if problem is with quality we should get instrument or people who can judge quality
Adding to above doubt, sir what is the meaning of next lines “…and disclosure including:(1) The likelihood of material misstatement due to the particular charecteristics of relevant class of transactions, account balance, or disclosure; and
(2) Whether the risk assessment takes into account the relevant controls thereby requiring auditor to obtain audit evidence to determine whether the controls are operating effectively.”