Company Analysis: Twd
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Running Head: COMPANY ANALYSIS: TWD
Company Analysis: TWD
University of Phoenix
ACC/599
March 1, 2010
Company Analysis: TWD
Audit risk is the risk of the auditor providing an inappropriate opinion on the financial statements, particularly when those financial statements contain a material misstatement (Audit Risk). These risks can be a result of a number of factors. In reality, it is impossible to audit 100% of anything 100% of the time. Many users of audited financial statements generally believe that one of the main objectives of audits is fraud detection. Independent auditors know the issue is very complex and they fear the general view that their work should bring out all types of fraud and misstatement in financial statements. The concept of risk exists in any audit and with any client. It is essential for an auditor to know the risk that exists and ways to mitigate the risk (Louwers, p. 69). This is why it is essential that the auditor know the business before starting their audit process. The SAS 99 presents an extensive range of audit responsibilities. The standard requires auditors to understand fraud; assess fraud risks; design audits to provide reasonable assurance of detecting fraud that could have a material effect on financial statements, and report findings (Louwers, p. 70).
Risks Associated With Potential Client TWD
In examining the profile of Toxic Waste Disposal (TWD), there were a number of potential fraud risks. The first identifiable risk is the fact that the board of directors is controlled by Mead. Mead is the majority stockholder, who is also the chief financial officer. TWD does not have an audit committee. This can be a problem. The internal auditor reports directly to the controller who in turn reports to Mead. A high rate of turnover for personnel in key positions exists. The environment there seems to be unstable. A more recent development is the fact that TWD altered their way of preparing financial...
Company Analysis: TWD
University of Phoenix
ACC/599
March 1, 2010
Company Analysis: TWD
Audit risk is the risk of the auditor providing an inappropriate opinion on the financial statements, particularly when those financial statements contain a material misstatement (Audit Risk). These risks can be a result of a number of factors. In reality, it is impossible to audit 100% of anything 100% of the time. Many users of audited financial statements generally believe that one of the main objectives of audits is fraud detection. Independent auditors know the issue is very complex and they fear the general view that their work should bring out all types of fraud and misstatement in financial statements. The concept of risk exists in any audit and with any client. It is essential for an auditor to know the risk that exists and ways to mitigate the risk (Louwers, p. 69). This is why it is essential that the auditor know the business before starting their audit process. The SAS 99 presents an extensive range of audit responsibilities. The standard requires auditors to understand fraud; assess fraud risks; design audits to provide reasonable assurance of detecting fraud that could have a material effect on financial statements, and report findings (Louwers, p. 70).
Risks Associated With Potential Client TWD
In examining the profile of Toxic Waste Disposal (TWD), there were a number of potential fraud risks. The first identifiable risk is the fact that the board of directors is controlled by Mead. Mead is the majority stockholder, who is also the chief financial officer. TWD does not have an audit committee. This can be a problem. The internal auditor reports directly to the controller who in turn reports to Mead. A high rate of turnover for personnel in key positions exists. The environment there seems to be unstable. A more recent development is the fact that TWD altered their way of preparing financial...