Auditing - Understanding and Assessing Internal Control Essay

Auditing - Understanding and Assessing subjective Control - Essay Example3. There is a stake of window dressing from store managers in order to achieve higher bountyes. They may use techniques to alter the figurers of the inventory as to avail the bonus for example by not recording the last day inventory as to aim a better inventory management which will ultimately result in understatement of inventory and payable balances.4. The gamble in this case is that, the remaining staff may not possess the same level of skills. They may be unable provide with the quality of service required to detect, prevent and correct the misstatements. Fewer numbers pool of people in the internal audit department will also put extra sum of responsibility on the remaining staff so, the level of care could also be compromised resulting in non-detection of misstatements.5. The risk in this case is that the quarterly financial statements are not presented to the bank as required and it withdraws the book of facts facility. If this happens, there is a danger that the Homepro would have liquidity problems, which may prevent the company to carry stemma and revenue is lost. There are also chances of window dressing.6. Increased use of online shopping is a flagellum to the Homepro, since it may have serious effects on revenue (AUASB, 2009). There is a possibility that the col of the online store would be delayed and the revenue would be lost. There is a threat of revenue cosmos overstated to present a better picture for example, by recording revenue receipts, which pertain to succeeding(a) year.7. The increased competition would force price cuts, which would ultimately result in fall revenue and decreased profits. There are chances of revenue being overstated, or non-recording or delay in recording of expenses to introduce better profit figure for example by not recording year end expenses to show lower cost of sales.8. Although the staff has been trained properly to handle t he changes in the information system repayable to up gradation but still there are