澳洲会计审计专用教材总结ID summary.doc

General rule( the regulators have the idea that comparability would be achieved when each company’s financial prepared in accord with the same rules. The mistaken proposition is that uniformity of essentially input and processing rules would produce uniform, comparable financial statements. Yet the falsity in the reasoning of the proposition was clearly demonstrable, and clearly evidenced by the variance in the outputs in the forms of financial statements of companies following the rules. Audit Risk Inherent risk: one-man show; complex structure; complex financial arrangement (related party transactions); high risk industry; over-reliance on debt; aggressive expansion strategy; foreign exchange dealings Control Risk: one-man show; corporate governance; internal control Enron case:High Inherent Risk: ① conglomerate structure with numerous subsidiaries and SPEs. ② Enron engaged in energy, which included hedge and derivative transaction. ③ Price volatility. High control risk: poor internal control. High detection risk: ①Anderson – lack of independence. ② the provision of non-audit related services by audit firms.③ The former employee of outside auditors was Enron’s internal accounting staff. ④ Anderson received $23m non-audit service fee, which occupied 92% of the whole audit fee. ⑤He destroyed the document before litigation. HIH case: High inherent risk: ① aggressive acquisition strategy ② dominant manager ③ industry risk (insurance industry uses provisioning policies and discounting rate) ④ complex corporate structure High control risk: ① insufficient information system ② incompetent manager- no identifiable long-term strategy ③ poor corporate governance ④ ineffective audit committee High detection risk: lack of professional skeptics( Andersen generally relied on extracts from 6 months reports that actually prepared without any expert assistance and he mainly relied on HIH’s internal audit report. Quality Control Mechanism Quality control in a manufacturing setting