3- Write about Engagement letter and its importance? What isEngagement risk?
4- When an Auditor finds misstatements in entities financialstatements which may be the result of fraudulent act, what shouldbe the role of an auditor under that situation?
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1 What is Audit RiskAns Audit Risk is a risk that the financialstatementBalance sheet Profit and loss account etc arematerially incorrect even though report of auditor states that thefinancial statement are free from material statement The purposeof an audit is to reduce the audit risk to an appropriate low levelthrough sufficient testing and verification of evidence Below arethe two types of audit Riski Risk of material statementii Detection Risk2 Role of Audit committeeAnsThe primary objective of Audit committee isto oversight of the financial reporting processthe audit processthe company system of internal controls and compliance with lawsand regulations Broadly audit committee is
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