Question

Detection Risk explain and give 5 examples?

Define Brainstorming session and give 5 examples ?

Answer 1

Detection risk is the risk that auditors will not be able to detect the misstatements in the financial statements.

Example:-

1. Auditor took the sample of 5 out of 100 transactions and they turned out to be correct. However, in other transactions, misstatements existed.

2. Auditor checked 5 godowns out of 50 and found no misstatement. But there was fraud which he missed.

3. Auditor went to physically count the cash and found that it was correct. But the denomination is different and he missed that.

4. Auditor counted the number of employees as per payroll register with the physical employees but he missed the tally of the actual number of male and female as reported in the register. Female numbers are artificially inflated.

5. The auditor relied on the vouchers given by the accountant but he did not investigate further with respect to their authenticity which did not help in uncovering the fraud.

Brainstorming session involves generating the numerous solutions or ideas for a particular issue or problem.

Example

1. Session on wildlife protection.

2. Session on controlling pollution,

3. Session on US Taxation problems.

4. Session on accounting standards practical implementation.

5. Session on globalization.

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