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Report on Auditing Theory and Practices

   

Added on  2020-06-04

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Auditing theory and practices
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Table of ContentsINTRODUCTION...........................................................................................................................1Question 1...................................................................................................................................1Question 2...................................................................................................................................4CONCLUSION................................................................................................................................5REFERENCES................................................................................................................................6
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INTRODUCTIONIn business, there are various factors that are to be taken into consideration so that allprocesses will be performed in an effective manner. Out of all, risk is the most important aspectthat shall be controlled (Stewart and Shamdasani, 2014). For this, it is required that it shall beidentified and for this, professionals will have to be hired so that it can be undertaken. They willthen take such steps by which it can be avoided. The risk related to Coca-cola is very high and itis one of the leading company in world. There are various factors which are responsible for thisand those will be discussed in report presented below as by that profits are being affected.Question 1In the process of audit, there are various risks which are faced by auditors and are knownas audit risk. Due to them auditor will not be able to provide appropriate opinion in report. Underthis, report can be presented in many ways by auditor. Such as he will be presenting a qualifiedreport but it is not necessary to mention some qualification under this. There can be situationunder which he will be failing to report any imperative matter or an unqualified report isproduced (Garg, Jia and Datta, 2011). There may be a situation in which the scope of audit isrestricted and so views will not be presented in proper manner on financial statements. In audit, risk is classified in various categories which involve detection , inherent andcontrol risk. All the risks will be affecting audit performance as effectiveness and efficiencybears impact of it. The main aspect which is to be evaluated on priority is inherent risk and inthat various factors shall be noted.Under inherent risk, all the errors are made due to misstatement and in this, control is notthe reason. It is difficult to be identified as it is incorporated within the system and so, leads tovast impact. There are various situation in which it will be higher and those arise whenpredictions are made or judgements are made at higher level of degree or when all thetransactions which are undertaken are of complex nature. The business which is new andrecently established will have to face higher risk than that of the one which is old and has madeits place in competitive world (Audit and Assurance, 2017). This is because; the neworganisation will not be knowing all conditions and is working in unstable market where lots ofchanges are to be faced by it. So, due to the same, risk involved is also higher.1
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