13. Consult Paragraphs 7–10 of PCAOB Auditing Standard No. 12. Based on your und

Question

13. Consult Paragraphs 7–10 of PCAOB Auditing Standard No. 12. Based on your understanding of risk assessment and the case information, identify three specific factors about Enron’s business model in the late 1990s that might cause you to elevate the risk of material misstatement at Enron.

14. Consult Paragraphs 5–7 of PCAOB Auditing Standard No. 13. Comment on how your understanding of the inherent risks identified at Enron (in Question 13 above) would influence the nature, timing, and extent of your audit work at Enron.

Explanation / Answer

Ans 13) The thee major factor are

1)Relevant industry,

2)regulatory,

3)ther external factors

1) Relevant Industry includes Nature of Company

The company's selection and application of accounting principles, including related disclosures

  The company's objectives and strategies and those related business risks that might reasonably be expected to result in risks of material misstatement

The company's measurement and analysis of its financial performance.

2)Under Regulatory and External Envoirnment: Obtaining an understanding of relevant industry, regulatory,
and other external factors encompasses industry factors,
including the competitive environment and technological
developments, the regulatory environment, including the
applicable financial reporting framework and the legal
and political environment, and external factors,
including general economic conditions.

Ans 14)Under this standred we indentified the risks of material misstatement, particularly fraud risks,
should involve the application of professional skepticism
in gathering and evaluating audit evidence

This would influence the nature, timing, and extent of your audit work at Enron.

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