2016年ACCA考试《财务会计》备考考点(4)[1]

THE CONTROL ENVIRONMENT OF A COMPANY (四)

　　4 Management’s philosophy and operating style

　　A company’s board of directors will comprise of individuals each with a different mind – set as to philosophy and operating style, manifested in characteristics such as their:

　　approach to taking and managing business risk

　　attitudes and actions toward financial reporting

　　attitudes toward information processing and accounting and functions personnel.

　　Each of the above characteristics underlie a company’s control environment and it is crucial for an auditor to have an understanding of them. Dealing with each in turn:

　　Approach to taking and managing business risk. Business risk is the risk inherent in a company as a consequence of its day-to-day operations and it comprises several components. The first of these is financial risk – for example, the risk that the company may have insufficient cash flow to continue in operation. The second component is operational risk – for example, the risk that the company’s product lines may decline in popularity leading to a sharp decline in sales and profitability. The final component of business risk is compliance risk – for example, the risk that the company may be in breach of health and safety regulations, leading to the possibility of hefty fines or even the closedown of operational activity. Candidates should be aware that a risk-based approach to an audit requires the identification and assessment of inherent risk factors and then of the control risk pertaining to these, in order to determine the risk of material misstatement, prior to carrying out substantive procedures. By adopting a top-down approach to the audit and first identifying business risks, auditors should be able to identify the associated inherent risks arising. They can then progress through the audit using the audit risk model (audit risk = the risk of material misstatement x detection risk) to determine the amount of d特许公认会计师(ACCA/CAT)