Audit Case - RedPack Beer Company

The purpose of risk assessment is not to remove risks, but to take reasonable steps to reduce them. The process involves looking at the risk, and considering what can be done to make it less likely that the risk will develop into a reality. This can be done through implementing policies and codes of practice, acting in individual’s best interests, fostering culture of openness and support being consistent, maintaining professional boundaries and following systems for raising concerns.

Knowledge about risks related to the company evaluated as part of the auditor 's client acceptance and retention evaluation; and the relative complexity of the company 's operations. ( Auditing Standard No. 9 //. (n.d.).

Managements are required to make judgments, estimates and assumptions that affect the application of policies; assets, liabilities, income and expenses in order to prepare consolidated financial statements. These assumptions and estimates are critical and they are made in

According to an article in the CPA Journal, the auditor considers reliability of audit evidence collected and the reliability of that evidence to reduce the risk of financial statements containing undetected material errors. Compare and contrast at least two (2) types of evidence, and make a recommendation as to which you believe is the most reliable in reducing risk. Support your position.

1a) What should the auditor consider when determining whether an account should be considered significant?

As the business environment grows and companies find new ways to expand into their respective - or even new – markets, it is important that reporting standards stay up to date with changes and continue to assist companies in providing their users with useful accounting information. Information is labelled as being useful when it meets the

2. Auditors are required to consider evidence obtained and accumulated throughout the audit and make an overall evaluation as to whether substantial doubt exists with respect to the ability of the client

IASB. 2010, "The Conceptual Framework for Financial Reporting" IFRS, pp. A21- A38, viewed 23 April 2014,

e. “The auditor considers the level of assurance, if any, he wants from substantive testing for a particular audit objective and decides, among other things, which procedure, or combination of procedures, can provide that level of assurance. For some assertions, analytical

The auditor must obtain an understanding of the entity and its environment, including internal controls, so that they can identify and assess the risks of material misstatement on financial statements due to fraud or error and design and perform further audit procedures.

This frequently puts the auditor in the position, in effect, of deciding whether a company is able to obtain the funds it needs to continue operating. Thus, the auditor’s qualification tends to be a self-fulfilling prophecy. The auditor’s expression of uncertainty about the company’s ability to continue may contribute to making it a certainty.

An audit is based when management prepares the financial statements, maintain internal control over financial reporting, and provide relevant information and access to the auditor.

Other changes arise from management decisions about using the appropriate accounting methods for preparing financial statements. There are a number of estimates made in order to prepare the financial statements at the end of each period. These estimates are based on the facts and circumstances that exist at the time, but they will change from one period to the next. Unfortunately

II. Some entries in accounting involve an unavoidable degree of estimation, judgment and prediction. In some cases for example, in estimating life of an asset for calculating depreciation, these estimates are normally made inside the business and the creative accountant

- whether proper accounting records have been kept by the company and proper returns adequate for their audit have been received from brunches not visited by them