Auditing Essay Example | Topics and Well Written Essays - 2000 words - 5

Auditing - Essay Example The evaluation of the audit risks involved in the audit of the company is analyzed and thus explained their extent and effect. Along with the inherent risks of audit there are various other risks that are involved in the audit of a company. Auditors check for material misstatement in the financial statements and report accordingly. However there are risks involved in audit which are inherent risks as the management of the company is involved in the operations and recording of the transactions and thus provide assertions upon the financial statements of the company and thus the auditors are to check the assertions as well. The audit risks involved in the audit of Mobile Streams Plc. is elaborated below: The company is operating as a group and the financial statements prepared and presented are of the parent and of the group. The risk of disclosure of the related party disclosures along with the measurements of the holding percentages shall be a risky element in the financial statements. Mobile Streams Plc. undergoes complex, diverse and decentralized business operations as it is operating as a group and these characteristics increases the risk of material misstatements (C. WILLIAM & PHIL, 2013). Along with the management and disclosures of the complex accounting treatments there is a risk that accounting for the consolidation in the group shall not be properly accounted for as the local accounting treatments are different as to the level of adoption of financial reporting standards. The consolidation of the financial statements increases the risk as the financial information is obtained from different segments and then consolidated and the acquisition of information from wide sourc e increases the risk of misstatement. Consolidating the accounts of parent and subsidiary is a complex accounting treatment and thus increases the audit risks as per the