The following table shows a number of factors recognised by the auditor as having an effect on the risk of fraud. Note: Number 1 risk factor is completed for you as an example in the table below. Using the table below, write your answers for Number 2 to 6 in the table. Required: For each of the foregoing risk factors listed in the left-hand column of the Table above, write in the right-hand column (i) the risk component that is most directly related to the following three option: Incentives/Pressures (I/P) Opportunity (O)Attitude/Rationalisation (A/R) (1)1) Management shows an excessive interest in increasing theA/Rentity's share price.2) The entity's industry is highly competitive.3) The board of directors emphasises its operational executivefunction over its supervisory/stewardship function.| 4) The staff assigned to support the work of the audit committeepossesses inadequate accounting expertise.5) Executives do not prepare improvement plans in response to thecorporate internal auditors' recommendation on improvements incontrols.6) There is a corporate culture of obedience and loyalty and mostemployees work in the same division from hiring date untilretirement.

Step 1 Auditor have to assess substantive audit procedure in case of there is some chances of Risk…

Answered: Required: For each of the foregoing…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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The following table shows a number of factors recognised by the auditor as having an effect on the risk of fraud.

Note: Number 1 risk factor is completed for you as an example in the table below. Using the table below, write your answers for Number 2 to 6 in the table.

Required:

For each of the foregoing risk factors listed in the left-hand column of the Table above, write in the right-hand column (i) the risk component that is most directly related to the following three option:
Incentives/Pressures (I/P)
Opportunity (O)
Attitude/Rationalisation (A/R)

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