Industry and external environment. The auditor asks what is happening outside the company that could affect its operations or accounts. Two furniture manufacturers may face the same increase in timber prices but experience different effects because one can raise its selling prices while the other has fixed-price contracts. Understanding the client’s circumstances helps the auditor interpret its financial results. mia.org.my
| External factor | Possible effect on the client | Audit question |
|---|---|---|
| Falling demand for a furniture design | Older models accumulate in the warehouse. | Can the company still sell those models for enough to recover their carrying amount? |
| Exchange rate changes | The ringgit amount needed to settle foreign-currency supplier invoices changes. | Were outstanding foreign-currency payables translated using the appropriate year-end rate? |
| Financial difficulties among retailers | Customers take longer to pay. | Does the allowance for doubtful debts reflect the risk of non-payment? |
Tiada ulasan:
Catat Ulasan