Assume That You Have Been Assigned to the Audit of an International

question 72

Essay

Assume that you have been assigned to the audit of an international bank.The bank does business in 20 countries,including the United States,Germany,and Norway.a.Discuss the demand for auditing.Why would an audit be useful for parties outside the bank?
b.Define the risk of material misstatement for this bank.Describe how you as an auditor would go about assessing and controlling this risk.c.Define audit risk as it relates to this client.Identify the financial statement accounts that provide the highest audit risk for the auditor and explain how you would control this risk.

---

Definitions:

Interest Rate

The share of a loan subject to interest charges to the borrower, typically denoted as an annual percentage of the loan's outstanding sum.

Nominal Interest Rate

The stated interest rate on a loan or investment, not adjusted for inflation.

Rational Consumer

An assumption in economics that consumers aim to maximize their utility or satisfaction from consumption choices, given their budget constraints.

Cobb-Douglas Utility Function

A specific form of utility function used in economics to represent preferences, where utility is derived from a combination of goods, typically modeled with constants representing the elasticity of substitution between those goods.