Sir chapter 3 question 26 (b) of the IPCC practice manual has the question "Audit risk at the account balance level and at the class of transaction level" , the answer given is general. My doubt is can we write the answer quoting SA 315 Assertions at the class of transaction & events and account balances at the period end for assessment of RMM?

1 answer

Ravi Staff March 22, 2018

they are explaining where we see inherent risk at account balance level and transaction level
we get inherent risk where we see
complexity (inventory costing)
lot of judgement (capitalisation of expenses)
chances of misappropriation (cash / stock)
Unusual Transactions (heavy sales return after year end)
Chances of Mismanagement (No department head and inadequate team in a particular branch) 

try to stick to this only

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