Question

Explain What are the:

a) key profit drivers

b) key risk areas

c) Provide 2 examples of each

Answer 1

Profit drivers are factors that can directly affect your bottom line. You should be able to realize by now that sometimes things won’t turn out the way you predict. There are so many unforeseen events and contingencies. There are months that you barely generate income, the market behavior may be hard to predict, tax policy changes, oil price hikes, calamities and many others.

Revenue Recognition.

Going Concern.

Internal Control Over Financial Reporting (ICFR)

Auditing Accounting Estimates, Including Fair Value Measurements.

Engagement Quality Review.

Professional Skepticism.

Related Parties and Amendments to Certain PCAOB Auditing Standards Regarding Significant Unusual Transactions.