Familiarity Threat in Auditing Familiarity threat is a risk to an auditor’s independence and judgment. It occurs when the auditor has a long or close relationship with their client and can lead to biased decisions and affect the audit’s transparency. This risk arises from various aspects of the auditor-client relationship, such as the appointment method, … Read more
Reasonableness Test in Audit Reasonableness tests are commonly used in audits to assess the accuracy of financial statements and identify potential discrepancies. The procedure involves analyzing the data of the financial statements to create expectations. These expectations are based on historical information and compare the current information with what is expected. This process helps to … Read more
Self-Review Threat in Audit & Safeguard Self-review threat in auditing occurs when the same team that is responsible for the financial statements is also responsible for reviewing their own work, creating a direct conflict of interest. This situation can arise when audit firms provide additional services to their clients beyond the primary auditing services. These … Read more
What is Advocacy Threat? Impact to Auditor & Safeguard Advocacy threat to auditor refers to a situation where the auditor’s objectivity and impartiality are compromised because they become too involved or aligned with the interests of their client. This can occur when the auditor is providing non-audit services to their client or has a close … Read more
Audit Accounts Receivable Accounts receivable are an integral part of any business as it is important to ensure the timely collection of payments from customers. These amounts owed are stated on invoices that are issued by the seller and imply that the customer has been granted credit. The credit limit of individual customers is determined … Read more
Audit Accounts Payable Accounts payable is the responsibility of the department responsible for processing obligations to suppliers for goods and services purchased on credit. The department must ensure that all payments are made within the agreed terms to avoid any penalties or interest payments. Furthermore, the department must maintain a good relationship with the supplier … Read more