What is required if a Material Weakness is identified?

Q: Outline the weaknesses of sensitivity analysis

A: Sensitivity analysis uses in capital budgeting for measuring the risk in project. It helps in…

Q: What is a Material Weakness?

A: Material Weakness: Material weakness is the often the result of deficiencies in one or more of a…

Q: What determines the acceptable level of Detection Risk?

A: Detection Risk:   It is a chance that an auditor will fail to identify any material misstatement…

Q: Why are CMOs overcollateralized?

A: CMO is the abbreviation used for collateralized mortgage obligation. It uses collaterals which are…

Q: Define stand-alone risk

A: Stand-alone risk:This refers to the risk linked with a single aspect of a firm or any particular…

Q: What are the key limitations of an internal control system?

A: Internal Control: A mechanism to maintain the goals of an entity in terms of organizational…

Q: What is the risk of Incorrect Rejection?

A: Risk of incorrect acceptance of internal control reliability and risk of incorrect acceptance of…

Q: What items could increase the risk of material misstatement?

A: Risk of material misstatement (ROMM) is a risk that the financial statements when audited will…

Q: Why is poor-quality systems documentation a prevalent problem?

A: Computer Based Information System: Computer based information system refers to the record of data…

Q: What is the purpose of a limit check?

A: Internal controls: Internal controls are the control established within an organization to check…

Q: “Costs of abnormal spoilage are losses.”Explain.

A: Abnormal spoilage is spoilage that is not inherent in a specific production process and will not…

Q: What is the difference between best efforts and underwriting?

A: The term best efforts allude to a specialist organization's consent to take the necessary steps to…

Q: Disadvantage of institutional based correction

A: Following is the answer to the given question

Q: is profile measurement and analysis? What are the limitations of this approach?

A:

Q: Define anchoring bias

A: Introduction: There are different forms of biases that are exposed to the particular decision makers…

Q: What is the risk of assessing Control Risk too low?

A: Definition:   Tests of controls: Tests of controls form the part of audit procedures to be…

Q: Describe Inherent Risk.

A: Definition:   Audit Planning: Audit planning is the first step in the auditing process. The auditor…

Q: Give an explanation about this statement: Why does control or internal control fails?

A: Internal control refers to the process of implementing and exercising the various mechanisms, rules,…

Q: ) What deficiencies in IRR can be overcome by using MIRR?

A: Introduction : Internal rate of return, commonly referred to as the IRR, can be understood as the…

Q: What are the advantages and disadvantages of using MUS? Under what conditions is it best used?

A:

Q: What is the risk of Incorrect Acceptance?

A: Risk of incorrect acceptance: The risk that the sample selected by the auditor may show that there…

Q: What is a Control Deficiency?

A:

Q: What are the risks from subversive threats?

A: Taking illegal access over a firm internal system network by doing activity of surpassing the…

Q: What are the types of situations that result in troubleddebt?

A: Troubled debts can result in two different situations, which are as…

Q: What is counterbalancing?

A: Errors: The comparability and consistency of the financial statements decreases when a company…

Q: What are (a) an internal control deficiency, (b) a significant deficiency, and (c) a material…

A:

Q: What is sensitive analysis?

A: Sensitive analysis is a method for predicting the outcome of a decision if a situation turns…

Q: What is the Allowable Risk of Over-reliance?

A: Auditor has to test the account balances and classes of transactions and has to do both control…

Q: Identify the weakness and the risk relating to the above.

A: Answer: The weakness is the shortcoming in any process and risk is the factor that result due to…

Q: Risk of material misstatements increases if

A: Please see the next step for the solution

Q: efine the term materiality and explain why it may be d

A: Materiality is quite important in preparing the financial statement and it is very important to the…

Q: What is the iceberg effect? How can CASE tools help to minimize this phenomenon?

A: The Iceberg Principle or Iceberg Theory is a hypothesis that proposes that we can't see or recognize…

Q: What is the purpose of physical controls?

A: Internal controls are policies incorporated by the Management to safeguard the assets of the…

Q: What is the drill-down approach?

A:

Q: Define underinvestment problem

A: Underinvestment refers to the situation where company or firm has insufficient investment or can…

Q: what is the break-even point and margin of safety ?

A: Break-even point In accounting language Break-even point means the total turnover of the company is…

Q: How can thepayback method be useful?

A: Meaning:   The payback period is the time required to earn back the amount invested in a…

Q: What is the risk of assessing Control Risk too high?

A: Control risk refers to the probability of financial statements that were considered wrongly stated…

Q: Difference Between Traceability and Controllability? Explain briefly in points.

A: Traceability and controllability are two concepts used in cost accounting. These are the forms of…

Q: What are practical weaknesses of NPO?

A: Organizations are described as business units which are established by the individuals, or group of…

Q: How is breakeven analysis different from CVP analysis?

A: Breakeven analysis: It helps to analyze the break-even level of company that is, the level of…

Q: Define risk of material misstatement.

A: Material misstatement represents the statement presented in the financial statement which is…