Areas of Heightened Audit Risk Assignment Example | Topics and Well Written Essays - 1500 words

Areas of Heightened study Risk - appellation ExampleIn itself, this reduction of c atomic number 18 payables by 7,352,000 seems stuff and nonsense and as such, an orbit of heightened audit risk.This informment could be associated with either a complete neglect of nearly liabilities from the pecuniary statements and/or enter at a lower amount. This deed would portray that Havelock Europa fraternity as healthier and less unsound since the omission of some expenses that atomic number 18 non yet remunerative lowers the debt and leads to an misinformment of incomes. From the financial statements of the Havelock Europa Company, the understatement could have been caused by the omission of dependant on(p) liability because, correspond to its policy, it considers contingent liabilities merely when it becomes seeming that it give have to stir payments under the insure (Havelock Europa Plc., 2013, p. 93). The next probable cause for this spill could be the omission of unearned revenues that trick out from prepayments from customers for services and goods not provided. Finally, the understatement could be as a ensue of Havelock Europa Companys fraudulent financial reporting scheme.The normal Company score Oversight gore (2014) states that cogitate society proceedings, including those in the midst of a company and its executives, is a critical celestial sphere as it has historically been characterised by increase risk of temporal misstatement. Therefore, this report overly considers the proceedings between Havelock Europa Company and its executives and related parties risky. These transactions are prone to manipulations and are used to understate liabilities or overstate assets. This report is implicated with the decrease in the amount from transactions with the management and meeting companies to 877,000 in 2013 from 914,000 in 2012 and 1,377,000 in 2013 from 2,045,000 in 2012 respectively (Havelock Europa Plc, 2013, p. 94). As n oted by Colby (2010), these related ships company transactions could be improper and mount due to barter and purchase transactions between unrevealed affiliates.