Auditing - Understanding and Assessing Internal Control Essay

Auditing - Understanding and Assessing Internal Control - Essay Example3. There is a risk of window dressing from interject managers in order to achieve higher bonuses. They may use techniques to alter the figurers of the inventory as to avail the bonus for example by not preserve the last day inventory as to show a better inventory management which will ultimately result in understatement of inventory and due balances.4. The risk in this case is that, the remaining staff may not possess the same level of skills. They may be unable provide with the caliber of service required to detect, prevent and correct the misstatements. Fewer numbers of people in the internal audit department will also put scanty burden of responsibility on the remaining staff so, the level of care could also be compromised resulting in non-detection of misstatements.5. The risk in this case is that the quarterly fiscal statements are not presented to the bank as required and it withdraws the credit facilit y. If this happens, there is a danger that the Homepro would have liquidity problems, which may prevent the company to tamp business and revenue is lost. There are also chances of window dressing.6. Increased use of online shopping is a threat to the Homepro, since it may have serious set up on revenue (AUASB, 2009). There is a possibility that the opening of the online store would be delayed and the revenue would be lost. There is a threat of revenue being overstated to present a better picture for example, by put down revenue receipts, which pertain to next year.7. The increased competition would force terms cuts, which would ultimately result in decreased revenue and decreased profits. There are chances of revenue being overstated, or non-recording or delay in recording of expenses to show better profit figure for example by not recording year end expenses to show lower cost of sales.8. Although the staff has been instruct properly to handle the changes in the information s ystem due to up gradation but still there are