Assessment Task 2(b) Template – Overall inherent risk assessment.
This task requires you to build on the information you gathered and documented for Task 2(a) and make an assessment of the overall inherent risk level for your chosen entity (NOT the Lakeside Company!).
Use this template: Assessment Task2b template.rtf to document and support your professional judgement about the overall assessment of the level of inherent risk for the entity you have chosen for Task 2. You will no doubt need to supplement the specific information provided for Task 2(a) with other material in the Annual Report and the Notes to the Financial Statements. The important thing is to support your judgements and do so by reference to the applicable ASAs and the facts (NOT assumptions) relevant to your chosen entity.
Instructions for submission are included on the template. Aim for around 750 words (that YOU add to the template).
This file (Assessment Task2b guide.rtf ) provides some guidance about things for you to ponder and explore in your preparation and research to complete the Task 2b template.
In addition, to assist with the preparation of the template for YOUR CHOSEN ENTITY during one of the live support sessions in Week 6 (prior to your Study Break) I will facilitate completing a similar template for the Lakeside Company so that the -process- is illustrated. I will advise which of the three scheduled sessions in due course - I aim to use the one that is most regularly attended ... and if no one turns up ... well, there will be nothing completed to guide you!
Link of chosen company: https://www.asx.com.au/asxpdf/20170929/pdf/43mrkffv3rsym7.pdf
NAME of your Entity
DISCUSSION
FACTOR According to ASA200.13(n)(i) inherent risk (IR) is a measure of the susceptibility of material misstatement before considering any internal controls. LOW MODERATE HIGH
Nature of client’s business
Results of previous audits
Initial versus repeat audits
Quantity of non-routine transactions
Quantity of estimates and judgement required for accounts
Potential for fraudulent financial reporting & misappropriation of assets (fraud risk factors, see ASA 240)
List any other factors (can you see any illustrations in your client’s annual report of the examples in ASA 315, Appendix 2 and ASA 570.A2?)
Conclusion: Overall inherent risk level Discuss how you arrived at your overall assessment here:
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