AA - Arthur Andersen
Forms & Schedules\11. Audit Procedures Library
Expenses
Risk Indicators
Expenses: Risk Indicators
Risk Indicator
Significance
Large contracts with vendors for services, including maintenance, research,
professional services, etc.
This may indicate an increased risk of misappropriation due to
noncompetitive purchase or service contracts or conflict of interests.
New or complex commission, compensation, or bonus plans.
This may indicate an increased risk of misstatement of selling or payroll
expenses due to misapplication of generally accepted accounting principles,
clerical, or computational errors or omissions.
New or complex employee fringe benefit and pension plan packages.
This may indicate an increased risk of misstatement of payroll related
expenses due to improper accounting, clerical, or computational errors or
omissions.
Significant changes in leasing activities.
This may indicate an increased risk of improper disclosure or accounting for
leases.
Significant levels of nonrecurring or unusual expenses.
This may indicate an increased risk of misstatement due to the possible lack
of procedures or accounting policies.
Significant restructuring or changes in the business.
This may indicate an increased risk of inadequate disclosure or accounting for
restructurings or significant changes in the business.
Risk of Errors
Erroneously recording expenses in the wrong period due to a lack of proper cutoff procedures. (Completeness, occurrence)
Inadvertent