The Commodification of Disease Essay - 548 Words

The commodification of disease is a rapidly growing trend internationally. Most notably, this is prominent in every type of cancer to various degrees. Consumers buy into marketing tactics and get a sense of gratification when they purchase items branded with a cancer ribbon or other known symbol. Through the perspective and lens of the Uses and Gratifications theory, you can see the different reasons as to what drives consumers to purchase these products and engage in a type of cancer culture within our society. Uses and Gratifications theory has been used to discover why consumers use different forms of media in order to feel a sense of fulfillment within themselves. Through an array of media, this theory has been proven to be effective†¦show more content†¦An example of this would be in Japan, where it has been suggested that the media is used to sustain a certain view of their society and behaviors (Rubin 1993). Other notes: Another approach to a study on uses and gratifications could be working backwards from pleasures and gratifications to needs (Katz, Blumler and Gurevitch 1973). Whichever way you proceed with a study, you need to systemize categories of the needs and wants of people to gauge the gratification from a particular type of media (Katz, Blumler and Gurevitch 1973). How it has been used in a past study: To further show the parallel of how Uses and Gratifications theory can be applied to participating in cancer culture, the first step is to see how it has worked within another study. Darrin Brown, Sharon Lauricella, Aziz Douai and Arshia Zaidi conducted a study on why media consumers are drawn to crime drama television shows, through a Uses and Gratifications approach. They’re method of research was a survey that yielded 130 responses, and out of those 88 were applicable to their research; they also included 4 open ended questions within their survey. Through variables of sex, age and other qualities, they were able to see exactly who reached more gratification watching these television shows. Men had more gratification than women, the older you were the more you enjoyed them, and the more hours you viewed these dramas, the less enjoyable they were (Brown, Lauricella, Douai, ZaidiShow MoreRelatedSelecting the Gender of a Baby: The issue on whether parents should be allowed to choose the sex1500 Words   |  6 Pagesadvantages that support the use of the procedure to allow parents to choose the sex of their offspring is the fact that it promotes early detection of diseases like Alzheimer’s disease and cancer through scientific means. Parents should be allowed to choose their offspring’s sex because it gives them an opportunity to screen their embryos for any diseases that can later affect the growth and development of their fetuses. Secondly, gender selection through Preimplantation Genetic Diagnosis should beRead MoreEssay about Cronon Review1262 Words   |  6 Pagesecosystems and the degree to which these changes result from the relationship between Indians and colonists and changes in the dominant modes of production. He argues that the transition to European agriculture, and the unsustainable extraction and commodification that accompanied capitalism led to changes in the reciprocal relationships between humans and the environment. Cronon begins by explaining two important concepts that lay the groundwork for his book. He details historical theories about theRead MoreAmerica s Health Care System Essay1615 Words   |  7 Pagesethnicity to income. There is a powerful connection between health and income. Low-income families are not typically capable of affording health care. Not having proper health care is accompanied with harmful health issues. As stated, â€Å"Poverty, disease, and illness often go together† (Macionis, p.41) Social Capital, Income Inequality, and Mortality has helped support that statement. Statistics proved that in 1990, mortality rates for poverty were at 57%. The underclass does not have the resourcesRead MoreThe Ethics Of Human Cloning918 Words   |  4 Pageswould give people another way to have children of their own, helpful to infertile people and people with hereditary genetic diseases. (148). Leon Kass explains that people might also seek human cloning to substitute for a dear relative (149). Harris contends that increased diversity from human cloning can reduce and possibly eliminate the risk of inheriting genetic diseases (148). Kass adds that human cloning increases possibility for carry ing out genetic selection and producing humans with healthierRead MoreChanges in the Land Essay1519 Words   |  7 Pagescommunities only produced a small margin of surplus beyond their own needs. 2. 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Because the slaves were often clustered together, â€Å"branding allowed for easy sorting as well as commodification.† While at sea the conditions of the ships where not suitable for human habitation. The African captives were treated like cattle, and packed on the ship like sardines. The two forms of packing that was done were loose packing, and tight packingRead MoreA Marxist Lens On Society And Ideology989 Words   |  4 Pageshad a tremendous impact on society and ideology. His theories, collectively understood as Marxism, surmise that the essential qualities governing all societies are economics and class struggle. Marx was particularly concerned with capitalism, commodification, inequality, and exploitation. Within the context of this class, a Marxist lens is essential because it provides context for the social justice issues examined. 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Conflict and Omagh Essay - 1053 Words

CONFLICT AND OMAGH ESSAY Conflict is an inevitable occurrence that occurs throughout all woks of life and its effect expand far beyond the individual person and pose a significant impact on the wider community. Conflicts can be as small as a disagreement with friends or family or as big as a bombing or war. Conflict can be expressed as a fight or struggle due to a clash between people with opposing beliefs or interests. Conflict occurs in social settings and has a great impact on a persons daily life and the lives of those in the society. Conflict is part of life of humans. It can be in various types such as racial conflicts such as in the Middle Eat, religious conflict, Bali Bombing and September 11, cultural or inner conflict. As†¦show more content†¦He was a man great courage and tolerance. He taught his followers to ‘adopt a peaceful course of action to avoid all violence’. Similar to Gandhi, he also rejected violence. In the 1950’s, Mandela was arrested and imprisoned for twenty-seven years. After that twenty-seven years of imprisonment, he would have seeked revenge but he didn’t, because he believed in avoiding conflict. Instead, he kept teaching peace and equality. Mandela led a life that symbolizes the triumph of human spirit. Latter in 1994, he led South Africa as President. It is people like Nelson Mandela that try and circumvent conflict even when a human is concerned. Martin Luther King was and African American that tried to end racial discrimination, which is a hug issue n our society today. He fought and stood up equality amongst all people. He was inspired of Gandhi’s success with non-violent activism. He stood up for what was right. He didn’t respond with violence but just spoke out publically. Conflict is everywhere, it is how it is dealt with that matters. The three great men dealt with conflict by teaching good values and principles, and proves that violence is not the only way to resolve conflict. Te Gallagher family encountered conflicts. When Michael was caught up with all the meetings , he was neglecting the family and there was no one to look after the family at home most of the times. In theShow MoreRelatedWhy Does Conflict Arise in Organizations3618 Words   |  15 PagesWhy does conflict arise in organizations, and how it can be managed ABSTRACT This essay seeks to illustrate how organizational conflict cannot be avoided. It will demonstrate the various ways in which conflict may arise within organizations and classify them into a range of groups. There will be a thorough analysis to show if conflict is positive or negative towards the growth of an organization. Findings of the previous will then lead to different mechanisms that can be used when managing conflict

Consumer Trust in E-commerce

Question: Analyse methods of determining the size and structure of markets and of segmenting particular markets. Evaluate strategies of promoting sales at different sales at different product types and services and identify the interrelationship to broaden company strategies. Evaluate the extent to which the Internet aids modern working practices. Demonstrate a critical awareness of the scope of e-commerce and its benefits in business and its practical and commercial limitations.? Answer: Introduction Today the concept of business is not limited to the traditional norms and ways. With the advancement in technologies and the era of internet dominance, it is found that the internet retailing is gaining increasing trust. E-commerce is penetrating into the market and the organisations rapidly. It has quite an impact on the lives of the people and boundaries between nations, and the information systems are fading with the same pace. A wide opportunity is present to the consumers as well as the marketers. The consumers can find and buy items from overseas with just a click and companies can broaden their market scope. Also, it is found that due to the efficiency of the service, the consumers are finding it increasingly trustworthy and satisfactory to resort to e-commerce sites than by going to traditional shops. Thus, the following paragraphs will discuss the consumer segments and the strategies to utilize this trust in marketing of important brands (Reedy and Schullo, 2004). Situational Analysis The situational analysis is done to understand the external and internal environmental force of the e-commerce market. The external force is further divided into micro and macro environmental forces and is described through PESTLE and Porter's 5 forces respectively. This analysis provides the competitive advantage (Lee and Huh, 2010). PESTLE Analysis Political- The political force is only fostering the growth of e-commerce sites as it is cheaper and faster, and the government has little access over what is being done in the internet websites. Economic- The cheap access to the internet, the recent recession and the trend in globalisation has roused the interest in the e-commerce site. But the downsizing of many companies and rising oil price has lead to huge shipping cost, this in turn lead to lower consumer spending (Abdallah and Maghrabi, 2009). Social- The fast speed internet and the access of internet-enabled gadgets to a greater section of the population have increased the popularity. Also, e-commerce is found to be cost effective as it does not require travelling and hence is considered a huge benefit. Technological- The largely available internet enabled phones, laptops and tabs along with the apps and latest software have made e-shopping as easy as clicking. Legal- Apart from some Cybercrime regulations and the industry standards the legal forces are minimal in causing any effect. Environmental- The sustainable opportunity due to the absence of construction wastage and large billing paper and energy consumption, the concept of e-commerce is totally eco-friendly. The micro environmental forces are defining the competitive advantage. Porter's 5 Forces Bargaining power of suppliers- The e-retailers depends upon many suppliers and distributors for the delivery of raw materials and finished products. Thus the companies have quite an influence on deciding the costs and improving features, but maintaining such a supply base is hard, and thus the suppliers possess much power to change their rates. Bargaining power of customers- Since these companies have a huge international customer base, all these people are buying individually. Thus they are unable to form association or groups, and hence they wield very less power over the companies. The threat of new entrants- There are a lot of new firms entering into the e-commerce business every day. It requires less time and finance in setting up and hence is a very interesting ground. But, the already established companies do not find any stiff competition from the new markets. Having a trademark is essential to protect one's business, and innovation is the strategy to be applied. The threat of substitutes- The physical shops, stores and the TV shops are the substitutes that are present but they are tedious processes, and it is hard to compare the prices and hence does not provide much competition. The threat of rivals- The competition is neck to neck among the largest selling e-retailers with each company vying to be the ultimate consumer choice. It is the strategy to provide the best rates and convenience and unique set of products to fight the completion. Competitor Analysis The type of retailers is the brick and mortar traditional retailers, the online rivals and the indirect companies. The low entry prices and the low costs, thousands of small and medium sized enterprises are gaining access to the e-retailing business. Even large establishes physical stores have opened their internet portals to distribute and conduct transactions. Companies like Amazon and e-bay are at loggerheads with even Wal-mart gaining access. Hence, there is a need to create consumer trust on the brand to drive the consumers away from another brand (JaÃÅ'ˆrvelaÃÅ'ˆinen, 2013). This trust could be the outcome of customer satisfaction established due to excellent service or delivery or due to the lower and comparative process offered than the market. Finally consumer satisfaction and trust could be the result of the range of items and varieties available. Hence, a competitive advantage of the e-commerce sites than the physical stores are its huge product range displayed t ogether or the ease of convenience and the attractive prices and offers. Also, attention should be paid while choosing suppliers and distributors to form long-term strategic partnerships. Further assessment of the competitors and the strengths and weaknesses will provide some added edge (Abyad, 2011). Market Segmentation The target market is to be designed after deciding the positioning strategy. The price of the product, the competitive advantage will decide which target market is to be selected. The target market is to be selected through some steps (Alessandra, 2006). Demographic- the age and Social Economic Class of the people who are to be targeted through the marketing strategies. Psychographic- the mindset and the product choices of the people will decide whether they are to be targeted. Behavioural- the consumer behaviour and brand trust developed will decide who are to be marketed through the activities (Tan and Wei, 2006). Hence, the target market comprises of the people who have belief in the company. This belief could be fostered through the company reputation and size. Once a trust is build, the marketing activities done through a range of media vehicles will influence the consumers in making the purchase decision (Jones and Leonard, 2008). Marketing Strategy through Social Media Strategies are thus formulated which determines the ways e-commerce retails could be marketed among the specific target segment and position it in the market to gain competitive advantage. Firstly, the retailers of groceries and miscellaneous articles could promote themselves through advertisements on the broadcast and print media. Using the social media is also effective. But the people who will buy this product cover all the available segments and hence are widely distributed and thus creating a single page is not enough. Linking the sites with different social Medias and other websites is also essential to tap the market (Collier, 2013). The segmented retailers like apparel retailers or book stores and furniture's can target their audience through clear methods. Many social media sites like Facebook, Twitter and Pinterest provide opportunities to conduct surveys and understand the consumer behaviour and choice. The number of clicks and visits in the page or the number of shares and reviews will deliver the popularity of the e-commerce companies. The social media provides exclusive platforms to introduce new companies and market their products. Paid advertisements of online stores are a common practice. Marketers even make use of games and quizzes to introduce offers and discounts and conduct sales promotion through the social media platforms. Strategies to Build Consumer Trust As it is seen from the above studies that consumer trust is the factor that is increasingly used by web retailers as a competitive advantage against traditional retailers (Webshaper.com.my, 2015). Thus the strategies derived by web retailers to build consumer trust are: 1. The first strategy is to create a good looking website, with smooth navigation system. It will attract customer and will perceived as costly and valuable (Cabezudo, Arranz and Cillan, 2008). 2. Using of a reputed payment gateway service, that is easily recognized by customers and is convenient will be effective in amplifying the image. E.g. PayPal, Visa. 3. The websites must get a third party security certificate or a trust mark that will convince the customers that the portal is safe and secure. The logo of the certificate like McAfee and VeriSign will serve the purpose (Nahari and Krutz, 2011). 4. Transparency should be maintained at all level. The contact information should be clearly provided with images and site maps. This way the authenticity of the company will be established. 5. There should be clear return and cancellation policy, and the price must be shown clearly. 6. All the queries and replies to the email are to be given personally. Having a content blog would be effective. 7. The companies should add customer reviews and testimonials and integrate with social media so that a link is provided with the number of person visiting the profile. 8. An authentic domain name should be bought and keywords are to be placed so that they are search engine friendly. 9. Finally the government internet regulations and policy should be followed strictly to provide the customers with the best service. Conclusion The internet is the most user friendly system today. Retailers and entrepreneurs are using this to their advantage to build consumer trust to gain competitive advantage. The competition is huge yet it is easy to tap the market and sale their products. The wide number of features and options make the process easy. Even the environmental forces are effective in providing the best kind of opportunities to the e-marketers. Social media platforms, apps and the search engines provide a wide berth for marketing. Hence, despite of the potent risks and threats, it is a beneficial sector to invest in. References Abdallah, W. and Maghrabi, A. (2009). Do multinational companies have effective transfer pricing systems of intangible assets and eà ¢Ã¢â€š ¬Ã‚ commerce?.Int Journal of Commerce Mgt, 19(2), pp.115-126. Abyad, A. (2011). Consumer Trust in E-commerce.MEJB, 6(3). Alessandra, A. (2006).Reach out to your customers. [S.l.: Electronic Database Pub.]. Cabezudo, R., Arranz, A. and Cillan, J. (2008). Designing Effective Websites: The Moderating Role of User Internet Experience.Journal of Internet Commerce, 6(1), pp.35-60. Collier, M. (2013).Social media commerce for dummies. Hoboken, NJ: Wiley. JaÃÅ'ˆrvelaÃÅ'ˆinen, J. (2013).Co-created effective, agile, and trusted eServices. Berlin: Springer. Jones, K. and Leonard, L. (2008). Trust in consumer-to-consumer electronic commerce.Information Management, 45(2), pp.88-95. Lee, C. and Huh, J. (2010). Website trust evaluation as cognitive information processing and the moderating role of situational involvement and e-commerce knowledge.International Journal of Internet Marketing and Advertising, 6(2), p.168. Nahari, H. and Krutz, R. (2011).Web commerce security. Indianapolis: Wiley Pub. Reedy, J. and Schullo, S. (2004).Electronic marketing. Mason, Ohio: Thomson/South-Western. Tan, G. and Wei, K. (2006). An empirical study of Web browsing behaviour: Towards an effective Website design.Electronic Commerce Research and Applications, 5(4), pp.261-271. Webshaper.com.my, (2015).Top 10 ways to Build Trust for your Online Store - E-commerce Learning Centre. [online] Available at: https://www.webshaper.com.my/learn/top-10-ways-build-trust-online.php [Accessed 7 Aug. 2015].

Livin On Country Essays - Alan Jackson, Country Music

Livin on Country The Alan Jackson Story Livin on Country is the complete story of Alan Jacksons journey from small-town Georgia to big time success. Alan represents the simple truths and homespun values that are the heart of country music. With songs that are personal yet universal, his music speaks to fans around the world. Alan has sold millions of albums, records and more than a dozen #1 hits, won numerous Academy of Country Music Awards, and been named Entertainer of the Year by the Country Music Association. Theres no denying that Alan Jackson is one of country musics greatest heroes. Country-Western music is the back bone of American life, how you can go from some one who has very little, to on top of the world. Alan Eugene Jackson was born October 17, 1958 in Newnan, Georgia. came from a family seven, his father Eugene, mother Ruth and four sisters: Diana, twins Cathy and Carol, and Connie. Meet his wife one Sunday afternoon after church at the local Dairy Queen in 1976, this was the teen hangout. Alan and Denise married on December 15, 1979. They moved to Nashville in August 1985, now they live in Brentwood, Tennessee. They have three daughters, their first daughter Mattie Denise on June 19, 1990, Alexandria Ali Jane was born on August 23, 1993, and Dani Grace was born on August 28, 1997. The author gives a lot of facts about Alans accomplishments in life and country music, but I dont believe he knew Alan personally. A lot of the facts are quotes from some of the interviews that Alan has given over the years. With enough researcher you wouldnt have to know your subject very well. The book just didnt make me feel like he knew Alan. Alan, I believe is one of the most inspirational singer/ song writers that country music has today. He does write almost all of his own material, not many can do this. Hes songs reflect on his own past and with the way that he see American life today. Some of the people that inspire him the most in country music are, the late great Hank Williams, and George Jones these two people are legends in country music. Real country is what they are about, how they see things in the real world. Life is no bed of roses, its how you live your life that makes you what you are today. With Alan Jackson singing and writing about the real world, the ups and downs in his experiences and things that he has seen makes me think back to the past. It feels good to sometimes sit back and reminisce. He is truly an inspiration to the way I see the American way.

Bronfenbrenner ecological theory of development Essay Example

Bronfenbrenner ecological theory of development Essay Example Bronfenbrenner ecological theory of development Paper Bronfenbrenner ecological theory of development Paper Bronfenbrenner ecological system theory is one of the most frequently cited development models of our times. Its wide spread acceptance is in part due to varied solutions that it offers to complicated social and community problems (Damon Lerner, 2006). The theory revolves around the development of child and the impact of seemingly intertwined social issues on individual personality traits. It hypotheses that children are impacted by their immediate environment such as family, school or friends while factors including health, religious teachings and economy are all interrelated to effect the overall lifestyle. Although the impact of immediate environment is the strongest but it can be mitigated by another more powerful event in life (Cocking and Renninger, 1993). The five systems, as described by Bronfenbrenner are Microsystems, Mesosystem, Exosystem, Macrosystem and Chronosystem. The impact of most important setting is explained by Microsystem which includes the family, peer, school and neighbourhood. Although there is no set pattern or limit to the level of influence that any one system may exhibit, Microsystem is considered most influential. Bronfenbrenner levels of influence on personal development My family has had great influence in shaping my development and aspirations. Since my childhood, my parents took it upon themselves to train and emphasize the importance of cultural values. I was brought up in an environment where tradition and religion dictated every aspect of personal life. It seemed that the Church played a pivotal role in further strengthening the beliefs and faith associated with a traditional Christian America. As a child, my early memories evoke a picture of strict adherence to Christian faith as I accompanied my mother and other female relatives on occasional Church activities. Furthermore, a close knit family fostered the development of strong family ties that encouraged participation in family events and exchange of gifts. Such was the emphasis on attending important family events that my family still somehow manages to attend various ceremonies in spite of the hardship to travel long distances. It will not be an oversimplification to suggest that these strong relationships fostered a sense of unity where every member of family garners support from other well established members of this group. I have seen several of my Cousins and Uncles getting financial support as well as help with finding jobs, guidance and medical treatments. Even Bronfenbrenner himself suggest that there is a need for American families to live close enough to rely on each other. He advises that living together will enhance our chances of supporting young parents and elders (Boemmel Briscoe, 2001). On the contrary, such affection adversely affected my lifestyle at school where it was almost difficult for me to adjust in Kindergarten and early grades. The primary reason for such an anomaly can be attributed to the fact that my initial upbringing was done with care and affection from Parents, Uncles and Aunts which made it difficult for me to take dictation from someone else, who was initially a stranger to me. The trend continued throughout my school life where I made only a few trusted friends as my personality became accustomed to making friends based on my own perception of trust. I was brought up in a middle class neighbourhood where residents from several different cultures lived together in harmony. Such peaceful coexistence further strengthened my belief of camaraderie and looking towards family and friends for help. The overall circumstances and a relatively peaceful environment assisted me in developing unbiased attitudes towards people of different faith, cultures, race and gender. I was also fortunate to have the teachers and mentors who helped me envision a better world without the myths and controversies usually associated with people of different lifestyle. Regular family functions promoted active participation in healthy activities which kept us away from being attracted by events in media. I still have a vague memory of watching cartoons and such popular TV shows as Sesame Street but TV time was strictly scheduled by parents who oversaw the selection of every thing being watched. Where such an attitude fostered the ideas of ethical viewing it also provided a yearning to resist the commands which to me were conflicting with the freedom that I intended. Strict adherence to rules invoked a personality conflict that later developed into doing things that had more detrimental results. It included getting into brawls, frequent mood swings and apathy from taking orders. These attitudes first developed at the age of seven, which my parents misunderstood as ADHD Attention Deficit Hyper Disorder. I also remembered to be given certain medications for a few months followed by frequent visits to the therapist. Fortunately, one of my extended family members is a medical professional who specialises in the area of child medicine. He was also accustomed to our family life therefore he was able to convince my parents that such traits are normal in boys transitioning to teenage and should not be taken seriously. Due to lack of solid data on ADHD and a strong debate surrounding the effective treatment, my family stopped any further treatment. I am not a fervent reader nor do I remember studying many books but it seems habitual that I skim through newspapers and magazine articles to keep myself updated with major events unfolding around me. Such habits have encouraged me to critically analyse events and reports without being overwhelmed by the tone of the writer. Furthermore, I understand that events unfolding around the World and global economic meltdown has made it difficult for many to make a substantial living but it should be understood that the recession is cyclical and United States still provides opportunities which are far superior to any that other people around the World can ever get. Bronfenbrenner theory graduate school Most of my family has worked hard to achieve their goals and education has assisted most of them to achieve their objectives. Since my childhood, I have seen most of my family members enjoying a privilege of holding at least a high school diploma. Nowadays, a high school diploma may not mean much to our generation but three to four decades earlier it could land someone a reasonable blue collar job. I was always taught about the virtues of getting quality education. I remember that my grandfather used to appreciate and encourage young people to attend educational seminars and events. His thoughts were based on the philosophy that education does not merely provide the knowledge to understand the facts but instead it teaches to differentiate between fact and fiction. I think that these ideas are deeply imbedded in my conscience which has helped me to develop a better understanding of the environment around me. While such an opinion has definitely helped me to pursue higher education, it has also set me back in achieving greater results from education. Following the philosophy of my grandfather, I always tried to understand the basics without evaluating everything in detail. I have been so overwhelmed by the idea of details that it has made it relatively difficult for me to grasp detailed guidelines. I am moulded to appreciate simple and least complex items. Nevertheless, I was never forced to get a higher degree. Enrolling in a Master’s Program is my own decision which has primarily resulted from the teaching of my elders and to a lesser degree for gaining financial prosperity. As discussed, I was fortunate enough to get good teachers who were a role model of a successful social person. It can be assumed that one of the other reasons to continue a Master’s degree might be an urge to remain close to people who exude an image of higher intellect than the society. Although gaining financial prosperity is my secondary aim but I must confess that my decision to get a Master’s degree is also dictated by fears of an insecure future without the financial freedom that an average person craves for. Due to the fact that my extended family acts as a closely knit unit, several of my Cousins and Uncles have themselves gone to earn continuing education credits. I think I am also afraid to face the criticism of my family for not striving for a higher degree when most of my cousins are already planning to do so. In this regard, I consider myself lucky to be among a fortunate few to be bestowed with some of the best educational systems in the World. To me, it will be an injustice to myself for not grasping this opportunity and implement its wisdom to utilize my knowledge for the betterment of human kind. I personally think that Bronfenbrenner theory helps define almost every aspect of my life and it advocates looking at interrelated parameters to find a plausible solution to problems. References Boemmel, J Briscoe J (2001 May 9). Web Quest Project Theory Fact Sheet of Urie Bronfenbrenner. Retrieved April 23, 2009, from National Louis University Web site: http://pt3. nl. edu/boemmelbriscoewebquest. pdf Cocking, R, Renninger, A (1993). The development and meaning of psychological distance. Lawrence Erlbaum Associates. Damon W Lerner R (2006). Handbook of Child Psychology: Theoretical models of human development. Wiley Sons Inc. p 991

International Standards on Auditing 315 Essays

International Standards on Auditing 315 Essays International Standards on Auditing 315 Essay International Standards on Auditing 315 Essay INTERNATIONAL STANDARD ON AUDITING 315 IDENTIFYING AND ASSESSING THE RISKS OF MATERIAL MISSTATEMENT THROUGH UNDERSTANDING THE ENTITY AND ITS ENVIRONMENT (Effective for audits of financial statements for periods beginning on or after December 15, 2009) CONTENTS Paragraph Introduction Scope of this ISA . 1 Effective Date 2 Objective . Definitions .. 4 Requirements Risk Assessment Procedures and Related Activities .. 5-10 The Required Understanding of the Entity and Its Environment, Including the Entity’s Internal Control .. 11-24 Identifying and Assessing the Risks of Material Misstatement 25-31 Documentation .. 2 Application and Other Explanatory Material Risk Assessment Procedures and Related Activities . A1-A16 The Required Understanding of the Entity and Its Environment, Including the Entity’s Internal Control .. A17-A104 Identifying and Assessing the Risks of Material Misstatement A105-A130 Documentation .. A131-A134 Appendix 1: Internal Control Components Appendix 2: Conditions and Events That May Indicate Risks of Material Misstatement IDENTIFYING AND ASSESSING THE RISKS OF MATERIAL MISSTATEMENT THROUGH UNDERSTANDING THE ENTITY AND ITS ENVIRONMENT ISA 315 272 International Standard on Auditing (ISA) 315, â€Å"Identifying and Assessing the Risks of Material Misstatement through Understanding the Entity and Its Environment† should be read in conjunction with ISA 200, â€Å"Overall Objectives of the Independent Auditor and the Conduct of an Audit in Accordance with International Standards on Auditing. † IDENTIFYING AND ASSESSING THE RISKS OF MATERIAL MISSTATEMENT THROUGH UNDERSTANDING THE ENTITY AND ITS ENVIRONMENT 273 ISA 315 AUDITING Introduction Scope of this ISA 1. This International Standard on Auditing (ISA) deals with the auditor’s responsibility to identify and assess the risks of material misstatement in the financial statements, through understanding the entity and its environment, including the entity’s internal control. Effective Date 2. This ISA is effective for audits of financial statements for periods beginning on or after December 15, 2009. Objective 3. The objective of the auditor is to identify and assess the risks of material misstatement, whether due to fraud or error, at the financial statement and assertion levels, through understanding the entity and its environment, including the entity’s internal control, thereby providing a basis for designing and implementing responses to the assessed risks of material misstatement. Definitions 4. For purposes of the ISAs, the following terms have the meanings attributed below: a) Assertions – Representations by management, explicit or otherwise, that are embodied in the financial statements, as used by the auditor to consider the different types of potential misstatements that may occur. (b) Business risk – A risk resulting from significant conditions, events, circumstances, actions or inactions that could adversely affect an entity’s ability to achieve its objectives and execute its strategies, or from the setting of inappropriate objectives and strategies. c) Internal control – The process designed, implemented and maintained by those charged with governance, management and other personnel to provide reasonable assurance about the achievement of an entity’s objectives with regard to reliability of financial reporting, effectiveness and efficiency of operations, and compliance with applicable laws and regulations. The term â€Å"controls† refers to any aspects of one or more of the components of internal control. d) Risk assessment procedures – The audit procedures performed to obtain an understanding of the entity and its environment, including the entity’s internal control, to identify and assess the risks of material misstatement, whether due to fraud or error, at the financial statement and assertion levels. IDENTIFYING AND ASSESSING THE RISKS OF MATERIAL MISSTATEMENT THROUGH UNDERSTANDING THE ENTITY AND ITS ENVIRONMENT ISA 315 274 (e) Significant risk – An identified and assess ed risk of material misstatement that, in the auditor’s judgment, requires special audit consideration. Requirements Risk Assessment Procedures and Related Activities . The auditor shall perform risk assessment procedures to provide a basis for the identification and assessment of risks of material misstatement at the financial statement and assertion levels. Risk assessment procedures by themselves, however, do not provide sufficient appropriate audit evidence on which to base the audit opinion. (Ref: Para. A1-A5) 6. The risk assessment procedures shall include the following: (a) Inquiries of management, and of others within the entity who in the auditor’s judgment may have information that is likely to assist in identifying risks of material misstatement due to fraud or error. Ref: Para. A6) (b) Analytical procedures. (Ref: Para. A7-A10) (c) Observation and inspection. (Ref: Para. A11) 7. The auditor shall consider whether information obtained from the auditorâ€℠¢s client acceptance or continuance process is relevant to identifying risks of material misstatement. 8. If the engagement partner has performed other engagements for the entity, the engagement partner shall consider whether information obtained is relevant to identifying risks of material misstatement. 9. Where the auditor intends to use information obtained from the auditor’s previous experience with the entity and from audit procedures performed in previous audits, the auditor shall determine whether changes have occurred since the previous audit that may affect its relevance to the current audit. (Ref: Para. A12-A13) 10. The engagement partner and other key engagement team members shall discuss the susceptibility of the entity’s financial statements to material misstatement, and the application of the applicable financial reporting framework to the entity’s facts and circumstances. The engagement partner shall determine which matters are to be communicated to engagement team members not involved in the discussion. (Ref: Para. A14-A16) IDENTIFYING AND ASSESSING THE RISKS OF MATERIAL MISSTATEMENT THROUGH UNDERSTANDING THE ENTITY AND ITS ENVIRONMENT 275 ISA 315 AUDITING The Required Understanding of the Entity and Its Environment, Including the Entity’s Internal Control The Entity and Its Environment 11. The auditor shall obtain an understanding of the following: (a) Relevant ndustry, regulatory, and other external factors including the applicable financial reporting framework. (Ref: Para. A17-A22) (b) The nature of the entity, including: (i) its operations; (ii) its ownership and governance structures; (iii) the types of investments that the entity is making and plans to make, including investments in special-purpose entities; and (iv) the way that the entity is structured and how it is financed to enable the auditor to understand the classes of transactio ns, account balances, and disclosures to be expected in the financial statements. Ref: Para. A23-A27) (c) The entity’s selection and application of accounting policies, including the reasons for changes thereto. The auditor shall evaluate whether the entity’s accounting policies are appropriate for its business and consistent with the applicable financial reporting framework and accounting policies used in the relevant industry. (Ref: Para. A28) (d) The entity’s objectives and strategies, and those related business risks that may result in risks of material misstatement. (Ref: Para. A29-A35) (e) The measurement and review of the entity’s financial performance. (Ref: Para. A36-A41) The Entity’s Internal Control 12. The auditor shall obtain an understanding of internal control relevant to the audit. Although most controls relevant to the audit are likely to relate to financial reporting, not all controls that relate to financial reporting are relevant to the audit. It is a matter of the auditor’s professional judgment whether a control, individually or in combination with others, is relevant to the audit. (Ref: Para. A42-A65) Nature and Extent of the Understanding of Relevant Controls 13. When obtaining an understanding of controls that are relevant to the audit, the auditor shall evaluate the design of those controls and determine whether they have been implemented, by performing procedures in addition to inquiry of the entity’s personnel. (Ref: Para. A66-A68) IDENTIFYING AND ASSESSING THE RISKS OF MATERIAL MISSTATEMENT THROUGH UNDERSTANDING THE ENTITY AND ITS ENVIRONMENT ISA 315 276 Components of Internal Control Control environment 14. The auditor shall obtain an understanding of the control environment. As part of obtaining this understanding, the auditor shall evaluate whether: (a) Management, with the oversight of those charged with governance, has created and maintained a culture of honesty and ethical behavior; and (b) The strengths in the control environment elements collectively provide an appropriate foundation for the other components of internal control, and whether those other components are not undermined by deficiencies in the control environment. (Ref: Para. A69-A78) The entity’s risk assessment process 15. The auditor shall obtain an understanding of whether the entity has a process for: (a) Identifying business risks relevant to financial reporting objectives; (b) Estimating the significance of the risks; (c) Assessing the likelihood of their occurrence; and (d) Deciding about actions to address those risks. (Ref: Para. A79) 16. If the entity has established such a process (referred to hereafter as the â€Å"entity’s risk assessment process†), the auditor shall obtain an understanding of it, and the results thereof. If the auditor identifies risks of material misstatement that management failed to identify, the auditor shall evaluate whether there was an underlying risk of a kind that the auditor expects would have been identified by the entity’s risk assessment process. If there is such a risk, the auditor shall obtain an understanding of why that process failed to identify it, and evaluate whether the process is appropriate to its circumstances or determine if there is a significant deficiency in internal control with regard to the entity’s risk assessment process. 17. If the entity has not established such a process or has an ad hoc process, the auditor shall discuss with management whether business risks relevant to financial reporting objectives have been identified and how they have been addressed. The auditor shall evaluate whether the absence of a documented risk assessment process is appropriate in the circumstances, or determine whether it represents a significant deficiency in internal control. (Ref: Para. A80) IDENTIFYING AND ASSESSING THE RISKS OF MATERIAL MISSTATEMENT THROUGH UNDERSTANDING THE ENTITY AND ITS ENVIRONMENT 277 ISA 315 AUDITING The information system, including the related business processes, relevant to financial reporting, and communication 18. The auditor shall obtain an understanding of the information system, including the related business processes, relevant to financial reporting, including the following areas: (a) The classes of transactions in the entity’s operations that are significant to the financial statements; (b) The procedures, within both information technology (IT) and manual systems, by which those transactions are initiated, recorded, processed, corrected as necessary, transferred to the general ledger and reported in the financial statements; c) The related accounting records, supporting information and specific accounts in the financial statements that are used to initiate, record, process and report transactions; this includes the correction of incorrect information and how information is transferred to the general ledger. The records may be in either manual or electronic form ; (d) How the information system captures events and conditions, other than transactions, that are significant to the financial statements; (e) The financial reporting process used to prepare the entity’s financial statements, including significant accounting estimates and disclosures; and f) Controls surrounding journal entries, including non-standard journal entries used to record non-recurring, unusual transactions or adjustments. (Ref: Para. A81-A85) 19. The auditor shall obtain an understanding of how the entity communicates financial reporting roles and responsibilities and significant matters relating to financial reporting, including: (Ref: Para. A86-A87) (a) Communications between management and those charged with governance; and (b) External communications, such as those with regulatory authorities. Control activities relevant to the audit 0. The auditor shall obtain an understanding of control activities relevant to the audit, being those the auditor judges it nece ssary to understand in order to assess the risks of material misstatement at the assertion level and design further audit procedures responsive to assessed risks. An audit does not require an understanding of all the control activities related to each significant class of transactions, account balance, and disclosure in the financial statements or to every assertion relevant to them. (Ref: Para. A88-A94) IDENTIFYING AND ASSESSING THE RISKS OF MATERIAL MISSTATEMENT THROUGH UNDERSTANDING THE ENTITY AND ITS ENVIRONMENT ISA 315 278 21. In understanding the entity’s control activities, the auditor shall obtain an understanding of how the entity has responded to risks arising from IT. (Ref: Para. A95-A97) Monitoring of controls 22. The auditor shall obtain an understanding of the major activities that the entity uses to monitor internal control over financial reporting, including those related to those control activities relevant to the audit, and how the entity initiates remedial actions to deficiencies in its controls. Ref: Para. A98-A100) 23. If the entity has an internal audit function,1 the auditor shall obtain an understanding of the following in order to determine whether the internal audit function is likely to be relevant to the audit: (a) The nature of the internal audit function’s responsibilities and how the internal audit function fits in the entity’s orga nizational structure; and (b) The activities performed, or to be performed, by the internal audit function. (Ref: Para. A101-A103) 24. The auditor shall obtain an understanding of the sources of the information used in the entity’s monitoring activities, and the basis upon which management considers the information to be sufficiently reliable for the purpose. (Ref: Para. A104) Identifying and Assessing the Risks of Material Misstatement 25. The auditor shall identify and assess the risks of material misstatement at: (a) the financial statement level; and (Ref: Para. A105-A108) (b) the assertion level for classes of transactions, account balances, and disclosures (Ref: Para. A109-A113) o provide a basis for designing and performing further audit procedures. 26. For this purpose, the auditor shall: (a) Identify risks throughout the process of obtaining an understanding of the entity and its environment, including relevant controls that relate to the risks, and by considering the classes of transactions, account balances, and disclosures in the financial statements; (Ref: Para. A114-A115) 1 The term â€Å"inter nal audit function† is defined in ISA 610, â€Å"Using the Work of Internal Auditors,† paragraph 7(a), as: â€Å"An appraisal activity established or provided as a service to the entity. Its functions include, amongst other things, examining, evaluating and monitoring the adequacy and effectiveness of internal control. † IDENTIFYING AND ASSESSING THE RISKS OF MATERIAL MISSTATEMENT THROUGH UNDERSTANDING THE ENTITY AND ITS ENVIRONMENT 279 ISA 315 AUDITING (b) Assess the identified risks, and evaluate whether they relate more pervasively to the financial statements as a whole and potentially affect many assertions; (c) Relate the identified risks to what can go wrong at the assertion level, taking account of relevant controls that the auditor intends to test; and (Ref: Para. A116-A118) (d) Consider the likelihood of misstatement, including the possibility of multiple misstatements, and whether the potential misstatement is of a magnitude that could result in a material misstatement. Risks That Require Special Audit Consideration 27. As part of the risk assessment as described in paragraph 25, the auditor shall determine whether any of the risks identified are, in the auditor’s judgment, a significant risk. In exercising this judgment, the auditor shall exclude the effects of identified controls related to the risk. 28. In exercising judgment as to which risks are significant risks, the auditor shall consider at least the following: (a) Whether the risk is a risk of fraud; (b) Whether the risk is related to recent significant economic, accounting or other developments and, therefore, requires specific attention; (c) The complexity of transactions; (d) Whether the risk involves significant transactions with related parties; (e) The degree of subjectivity in the measurement of financial information related to the risk, especially those measurements involving a wide range of measurement uncertainty; and f) Whether the risk involves significant transactions that are outside the normal course of business for the entity, or that otherwise appear to be unusual. (Ref: Para. A119-A123) 29. If the auditor has determined that a significant risk exists, the auditor shall obtain an understanding of the entity’s controls, including control activities, relevant to that risk. (Ref: Para. A124-A126) Risks for Which Substantive Procedures Alone Do Not Provide Sufficient Appropriate Audit Evidence 30. In respect of some risks, the auditor may judge that it is not possible or practicable to obtain sufficient appropriate audit evidence only from substantive procedures. Such risks may relate to the inaccurate or incomplete recording of routine and significant classes of transactions or account balances, the characteristics of which often permit highly automated processing with IDENTIFYING AND ASSESSING THE RISKS OF MATERIAL MISSTATEMENT THROUGH UNDERSTANDING THE ENTITY AND ITS ENVIRONMENT ISA 315 280 little or no manual intervention. In such cases, the entity’s controls over such risks are relevant to the audit and the auditor shall obtain an understanding of them. (Ref: Para. A127-A129) Revision of Risk Assessment 31. The auditor’s assessment of the risks of material misstatement at the assertion level may change during the course of the audit as additional audit evidence is obtained. In circumstances where the auditor obtains audit evidence from performing further audit procedures, or if new information is obtained, either of which is inconsistent with the audit evidence on which the auditor originally based the assessment, the auditor shall revise the assessment and modify the further planned audit procedures accordingly. (Ref: Para. A130) Documentation 32. The auditor shall include in the audit documentation:2 (a) The discussion among the engagement team where required by paragraph 10, and the significant decisions reached; b) Key elements of the understanding obtained regarding each of the aspects of the entity and its environment specified in paragraph 11 and of each of the internal control components specified in paragraphs 14- 24; the sources of information from which the understanding was obtained; and the risk assessment procedures performed; (c) The identified and assessed risks of material misstatement at the financial statement level and at the asserti on level as required by paragraph 25; and (d) The risks identified, and related controls about which the auditor has obtained an understanding, as a result of the requirements in paragraphs 27-30. Ref: Para. A131-A134) *** Application and Other Explanatory Material Risk Assessment Procedures and Related Activities (Ref: Para. 5) A1. Obtaining an understanding of the entity and its environment, including the entity’s internal control (referred to hereafter as an â€Å"understanding of the entity†), is a continuous, dynamic process of gathering, updating and analyzing information throughout the audit. The understanding establishes a frame of 2 ISA 230, â€Å"Audit Documentation,† paragraphs 8-11, and paragraph A6. IDENTIFYING AND ASSESSING THE RISKS OF MATERIAL MISSTATEMENT THROUGH UNDERSTANDING THE ENTITY AND ITS ENVIRONMENT 281 ISA 315 AUDITING reference within which the auditor plans the audit and exercises professional judgment throughout the audit, for example, when: Assessing risks of material misstatement of the financial statements; Determining materiality in accordance with ISA 320;3 Considering the appropriateness of the selection and application of accounting policies, and the adequacy of financial statement disclosures; Identifying areas where special audit consideration may be necessary, for example, related party transactions, the appropriateness of management’s use of the going concern assumption, or considering the business purpose of transactions; Developing expectations for use when performing analytical procedures; Responding to the assessed risks of material misstatement, including designing and performing further audit procedures to obtain sufficient appropriate audit evidence; and Evaluating the sufficiency and appropriateness of audit evidence obtained, such as the appropriateness of assumptions and of management’s oral and written representations. A2. Information obtained by performing risk assessment procedures and related activities may be used by the auditor as audit evidence to support assessments of the risks of material misstatement. In addition, the auditor may obtain audit evidence about classes of transactions, account balances, or disclosures and related assertions and about the operating effectiveness of controls, even though such procedures were not specifically planned as substantive procedures or as tests of controls. The auditor also may choose to perform substantive procedures or tests of controls concurrently with risk assessment procedures because it is efficient to do so. A3. The auditor uses professional judgment to determine the extent of the understanding required. The auditor’s primary consideration is whether the understanding that has been obtained is sufficient to meet the objective stated in this ISA. The depth of the overall understanding that is required by the auditor is less than that possessed by management in managing the entity. A4. The risks to be assessed include both those due to error and those due to fraud, and both are covered by this ISA. However, the significance of fraud is such that further requirements and guidance are included in ISA 240 in relation to 3 ISA 320, â€Å"Materiality in Planning and Performing an Audit. IDENTIFYING AND ASSESSING THE RISKS OF MATERIAL MISSTATEMENT THROUGH UNDERSTANDING THE ENTITY AND ITS ENVIRONMENT ISA 315 282 risk assessment procedures and related activities to obtain information that is used to identify the risks of material misstatement due to fraud. 4 A5. Although the auditor is required to perform all the risk assessment procedures described in paragraph 6 in the course of obta ining the required understanding of the entity (see paragraphs 11-24), the auditor is not required to perform all of them for each aspect of that understanding. Other procedures may be performed where the information to be obtained therefrom may be helpful in identifying risks of material misstatement. Examples of such procedures include: Reviewing information obtained from external sources such as trade and economic journals; reports by analysts, banks, or rating agencies; or regulatory or financial publications. Making inquiries of the entity’s external legal counsel or of valuation experts that the entity has used. Inquiries of Management and Others within the Entity (Ref: Para. (a)) A6. Much of the information obtained by the auditor’s inquiries is obtained from management and those responsible for financial reporting. However, the auditor may also obtain information, or a different perspective in identifying risks of material misstatement, through inquiries of others within the entity and other employees with different levels of authority. For example: Inquiries directed towards those charged with governance may help th e auditor understand the environment in which the financial statements are prepared. Inquiries directed toward internal audit personnel may provide information about internal audit procedures performed during the year relating to the design and effectiveness of the entity’s internal control and whether management has satisfactorily responded to findings from those procedures. Inquiries of employees involved in initiating, processing or recording complex or unusual transactions may help the auditor to evaluate the appropriateness of the selection and application of certain accounting policies. Inquiries directed toward in-house legal counsel may provide information about such matters as litigation, compliance with laws and regulations, knowledge of fraud or suspected fraud affecting the entity, warranties, post-sales obligations, arrangements (such as joint ventures) with business partners and the meaning of contract terms. 4 ISA 240, â€Å"The Auditor’s Responsibilit ies Relating to Fraud in an Audit of Financial Statements,† paragraphs 12-24. IDENTIFYING AND ASSESSING THE RISKS OF MATERIAL MISSTATEMENT THROUGH UNDERSTANDING THE ENTITY AND ITS ENVIRONMENT 83 ISA 315 AUDITING Inquiries directed towards marketing or sales personnel may provide information about changes in the entity’s marketing strategies, sales trends, or contractual arrangements with its customers. Analytical Procedures (Ref: Para. 6(b)) A7. Analytical procedures performed as risk assessment procedures may identify aspects of the entity of which the auditor was unaware and may assist in assessing the risks of material misstatement in order to provide a basis for designing and implementing responses to the assessed risks. Analytical procedures performed as risk assessment procedures may include both financial and non-financial information, for example, the relationship between sales and square footage of selling space or volume of goods sold. A8. Analytical procedures may help identify the existence of unusual transactions or events, and amounts, ratios, and trends that might indicate matters that have audit implications. Unusual or unexpected relationships that are identified may assist the auditor in identifying risks of material misstatement, especially risks of material misstatement due to fraud. A9. However, when such analytical procedures use data aggregated at a high level (which may be the situation with analytical procedures performed as risk assessment procedures), the results of those analytical procedures only provide a broad initial indication about whether a material misstatement may exist. Accordingly, in such cases, consideration of other information that has been gathered when identifying the risks of material misstatement together with the results of such analytical procedures may assist the auditor in understanding and evaluating the results of the analytical procedures. Considerations Specific to Smaller Entities A10. Some smaller entities may not have interim or monthly financial information that can be used for purposes of analytical procedures. In these circumstances, although the auditor may be able to perform limited analytical procedures for purposes of planning the audit or obtain some information through inquiry, the auditor may need to plan to perform analytical procedures to identify and assess the risks of material misstatement when an early draft of the entity’s financial statements is available. Observation and Inspection (Ref: Para. 6(c)) A11. Observation and inspection may support inquiries of management and others, and may also provide information about the entity and its environment. Examples of such audit procedures include observation or inspection of the following: The entity’s operations. IDENTIFYING AND ASSESSING THE RISKS OF MATERIAL MISSTATEMENT THROUGH UNDERSTANDING THE ENTITY AND ITS ENVIRONMENT ISA 315 284 Documents (such as business plans and strategies), records, and internal control manuals. Reports prepared by management (such as quarterly management reports and interim financial statements) and those charged with governance (such as minutes of board of directors’ meetings). The entity’s premises and plant facilities. Information Obtained in Prior Periods (Ref: Para. 9) A12. The auditor’s previous experience with the entity and audit procedures performed in previous audits may provide the auditor with information about such matters as: Past misstatements and whether they were corrected on a timely basis. The nature of the entity and its environment, and the entity’s internal control (including deficiencies in internal control). Significant changes that the entity or its operations may have undergone since the prior financial period, which may assist the auditor in gaining a sufficient understanding of the entity to identify and assess risks of material misstatement. A13. The auditor is required to determine whether information obtained in prior periods remains relevant, if the auditor intends to use that information for the purposes of the current audit. This is because changes in the control environment, for example, may affect the relevance of information obtained in the prior year. To determine whether changes have occurred that may affect the relevance of such information, the auditor may make inquiries and perform other appropriate audit procedures, such as walk-throughs of relevant systems. Discussion among the Engagement Team (Ref: Para. 10) A14. The discussion among the engagement team about the susceptibility of the entity’s financial statements to material misstatement: Provides an opportunity for more experienced engagement team members, including the engagement partner, to share their insights based on their knowledge of the entity. Allows the engagement team members to exchange information about the business risks to which the entity is subject and about how and where the financial statements might be susceptible to material misstatement due to fraud or error. Assists the engagement team members to gain a better understanding of the potential for material misstatement of the financial statements in the specific areas assigned to them, and to understand how the results of the IDENTIFYING AND ASSESSING THE RISKS OF MATERIAL MISSTATEMENT THROUGH UNDERSTANDING THE ENTITY AND ITS ENVIRONMENT 85 ISA 315 AUDITING audit procedures that they perform may affect other aspects of the audit including the decisions about the nature, timing, and extent of further audit procedures. Provides a basis upon which engagement team members communicate and share new information obtained throughout the audit that may affect the assessment of risks of material misstatement or the audit procedures performed to address these risks. ISA 240 provides further requirements and guidance in relation to the discussion among the engagement team about the risks of fraud. 5 A15. It is not always necessary or practical for the discussion to include all members in a single discussion (as, for example, in a multi-location audit), nor is it necessary for all of the members of the engagement team to be informed of all of the decisions reached in the discussion. The engagement partner may discuss matters with key members of the engagement team including, if considered appropriate, specialists and those responsible for the audits of components, while delegating discussion with others, taking account of the extent of communication considered necessary throughout the engagement team. A communications plan, agreed by the engagement partner, may be useful. Considerations Specific to Smaller Entities A16. Many small audits are carried out entirely by the engagement partner (who may be a sole practitioner). In such situations, it is the engagement partner who, having personally conducted the planning of the audit, would be responsible for considering the susceptibility of the entity’s financial statements to material misstatement due to fraud or error. The Required Understanding of the Entity and Its Environment, Including the Entity’s Internal Control The Entity and Its Environment Industry, Regulatory and Other External Factors (Ref: Para. 11(a)) Industry Factors A17. Relevant industry factors include industry conditions such as the competitive environment, supplier and customer relationships, and technological developments. Examples of matters the auditor may consider include: The market and competition, including demand, capacity, and price competition. Cyclical or seasonal activity. 5 ISA 240, paragraph 15. IDENTIFYING AND ASSESSING THE RISKS OF MATERIAL MISSTATEMENT THROUGH UNDERSTANDING THE ENTITY AND ITS ENVIRONMENT ISA 315 286 Product technology relating to the entity’s products. Energy supply and cost. A18. The industry in which the entity operates may give rise to specific risks of material misstatement arising from the nature of the business or the degree of regulation. For example, long-term contracts may involve significant estimates of revenues and expenses that give rise to risks of material misstatement. In such cases, it is important that the engagement team include members with sufficient relevant knowledge and experience. 6 Regulatory Factors A19. Relevant regulatory factors include the regulatory environment. The regulatory environment encompasses, among other matters, the applicable financial reporting framework and the legal and political environment. Examples of matters the auditor may consider include: Accounting principles and industry specific practices. Regulatory framework for a regulated industry. Legislation and regulation that significantly affect the entity’s operations, including direct supervisory activities. Taxation (corporate and other). Government policies currently affecting the conduct of the entity’s business, such as monetary, including foreign exchange controls, fiscal, financial incentives (for example, government aid programs), and tariffs or trade restrictions policies. Environmental requirements affecting the industry and the entity’s business. A20. ISA 250 includes some specific requirements related to the legal and regulatory framework applicable t o the entity and the industry or sector in which the entity operates. 7 Considerations specific to public sector entities A21. For the audits of public sector entities, law, regulation or other authority may affect the entity’s operations. Such elements are essential to consider when obtaining an understanding of the entity and its environment. 6 ISA 220, â€Å"Quality Control for an Audit of Financial Statements,† paragraph 14. 7 ISA 250, â€Å"Consideration of Laws and Regulations in an Audit of Financial Statements,† paragraph 12. IDENTIFYING AND ASSESSING THE RISKS OF MATERIAL MISSTATEMENT THROUGH UNDERSTANDING THE ENTITY AND ITS ENVIRONMENT 287 ISA 315 AUDITING Other External Factors A22. Examples of other external factors affecting the entity that the auditor may consider include the general economic conditions, interest rates and availability of financing, and inflation or currency revaluation. Nature of the Entity (Ref: Para. 11(b)) A23. An understanding of the nature of an entity enables the auditor to understand such matters as: Whether the entity has a complex structure, for example with subsidiaries or other components in multiple locations. Complex structures often introduce issues that may give rise to risks of material misstatement. Such issues may include whether goodwill, joint ventures, investments, or specials of matters that the auditor may consider when obtaining an understanding of the nature of the entity include: Business operations such as: Nature of revenue sources, products or services, and markets, including involvement in electronic commerce such as Internet sales and marketing activities. 0 Conduct of operations (for example, stages and methods of production, or activities exposed to environmental risks). 0 Alliances, joint ventures, and outsourcing activities. 0 Geographic dispersion and industry segmentation. 0 Location of production facilities, warehouses, and offices, and location and quantities of inventories. 0 Key customers and important suppliers of goods and services, employment arrangements (including the existence of union ontracts, pension and other post employment benefits, stock option or incentive bonus arrangements, and government regulation related to employment matters). 8 ISA 5 50, â€Å"Related Parties. † IDENTIFYING AND ASSESSING THE RISKS OF MATERIAL MISSTATEMENT THROUGH UNDERSTANDING THE ENTITY AND ITS ENVIRONMENT ISA 315 288 0 Research and development activities and expenditures. 0 Transactions with related parties. Investments and investment activities such as: 0 Planned or recently executed acquisitions or divestitures. 0 Investments and dispositions of securities and loans. Capital investment activities. 0 Investments in non-consolidated entities, including partnerships, joint ventures and special-purpose entities. Financing and financing activities such as: 0 Major subsidiaries and associated entities, including consolidated and non-consolidated structures. 0 Debt structure and related terms, including off-balance-sheet financing arrangements and leasing arrangements. 0 Beneficial owners (local, foreign, business reputation and experience) and related parties. 0 Use of derivative financial instruments. Financial reporting such as: Accoun ting principles and industry specific practices, including industry-specific significant categories (for example, loans and investments for banks, or research and development for pharmaceuticals). 0 Revenue recognition practices. 0 Accounting for fair values. 0 Foreign currency assets, liabilities and transactions. 0 Accounting for unusual or complex transactions including those in controversial or emerging areas (for example, accounting for stock-based compensation). A25. Significant changes in the entity from prior periods may give rise to, or change, risks of material misstatement. Nature of Special-Purpose Entities A26. A special-purpose entity (sometimes referred to as a special-purpose vehicle) is an entity that is generally established for a narrow and well-defined purpose, such as to effect a lease or a securitization of financial assets, or to carry out research and development activities. It may take the form of a corporation, trust, partnership or unincorporated entity. The entity on behalf of which the specialIDENTIFYING AND ASSESSING THE RISKS OF MATERIAL MISSTATEMENT THROUGH UNDERSTANDING THE ENTITY AND ITS ENVIRONMENT 289 ISA 315 AUDITING urpose entity has been created may often transfer assets to the latter (for example, as part of a derecognition transaction involving financial assets), obtain the right to use the latter’s assets, or perform services for the latter, while other parties may provide the funding to the latter. As ISA 550 indicates, in some circumstances, a special-purpose entity may be a related party of the entity. 9 A27. Fin ancial reporting frameworks often specify detailed conditions that are deemed to amount to control, or circumstances under which the specialpurpose entity should be considered for consolidation. The interpretation of the requirements of such frameworks often demands a detailed knowledge of the relevant agreements involving the special-purpose entity. The Entity’s Selection and Application of Accounting Policies (Ref: Para. 11(c)) A28. An understanding of the entity’s selection and application of accounting policies may encompass such matters as: The methods the entity uses to account for significant and unusual transactions. The effect of significant accounting policies in controversial or emerging areas for which there is a lack of authoritative guidance or consensus. Changes in the entity’s accounting policies. Financial reporting standards and laws and regulations that are new to the entity and when and how the entity will adopt such requirements. Objectives and Strategies and Related Business Risks (Ref. Para. 11(d)) A29. The entity conducts its business in the context of industry, regulatory and other internal and external factors. To respond to these factors, the entity’s management or those charged with governance define objectives, which are the overall plans for the entity. Strategies are the approaches by which management intends to achieve its objectives. The entity’s objectives and strategies may change over time. A30. Business risk is broader than the risk of material misstatement of the financial statements, though it includes the latter. Business risk may arise from change or complexity. A failure to recognize the need for change may also give rise to business risk. Business risk may arise, for example, from: The development of new products or services that may fail; A market which, even if successfully developed, is inadequate to support a product or service; or 9 ISA 550, paragraph A7. IDENTIFYING AND ASSESSING THE RISKS OF MATERIAL MISSTATEMENT THROUGH UNDERSTANDING THE ENTITY AND ITS ENVIRONMENT ISA 315 290 Flaws in a product or service that may result in liabilities and reputational risk. A31. An understanding of the business risks facing the entity increases the likelihood of identifying risks of material misstatement, since most business risks will eventually have financial consequences and, therefore, an effect on the financial statements. However, the auditor does not have a responsibility to identify or assess all business risks because not all business risks give rise to risks of material misstatement. A32. Examples of matters that the auditor may consider when obtaining an understanding of the entity’s objectives, strategies and related business risks that may result in a risk of material misstatement of the financial statements include: Industry developments (a potential related business risk might be, for example, that the entity does not have the personnel or expertise to deal with the changes in the industry). New products and services (a potential related business risk might be, for example, that there is increased product liability). Expansion of the business (a potential related business risk might be, for example, that the demand has not been accurately estimated). New accounting requirements (a potential related business risk might be, for example, incomplete or improper implementation, or increased costs). Regulatory requirements (a potential related business risk might be, for example, that there is increased legal exposure). Current and prospective financin g requirements (a potential related business risk might be, for example, the loss of financing due to the entity’s inability to meet requirements). Use of IT (a potential related business risk might be, for example, that systems and processes are incompatible). The effects of implementing a strategy, particularly any effects that will lead to new accounting requirements (a potential related business risk might be, for example, incomplete or improper implementation). A33. A business risk may have an immediate consequence for the risk of material misstatement for classes of transactions, account balances, and disclosures at the assertion level or the financial statement level. For example, the business risk arising from a contracting customer base may increase the risk of material misstatement associated with the valuation of receivables. However, the same risk, particularly in combination with a contracting economy, may also have a longer-term consequence, which the auditor considers when assessing the IDENTIFYING AND ASSESSING THE RISKS OF MATERIAL MISSTATEMENT THROUGH UNDERSTANDING THE ENTITY AND ITS ENVIRONMENT 291 ISA 315 AUDITING appropriateness of the going concern assumption. Whether a business risk may result in a risk of material misstatement is, therefore, considered in light of the entity’s circumstances. Examples of conditions and events that may indicate risks of material misstatement are indicated in Appendix 2. A34. Usually, management identifies business risks and develops approaches to address them. Such a risk assessment process is part of internal control and is discussed in paragraph 15 and paragraphs A79-A80. Considerations Specific to Public Sector Entities A35. For the audits of public sector entities, â€Å"management objectives† may be influenced by concerns regarding public accountability and may include objectives which have their source in law, regulation or other authority. Measurement and Review of the Entity’s Financial Performance (Ref: Para. 11(e)) A36. Management and others will measure and review those things they regard as important. Performance measures, whether external or internal, create pressures on the entity. These pressures, in turn, may motivate management to take action to improve the business performance or to misstate the financial statements. Accordingly, an understanding of the entity’s performance measures assists the auditor in considering whether pressures to achieve performance targets may result in management actions that increase the risks of material misstatement, including those due to fraud. See ISA 240 for requirements and guidance in relation to the risks of fraud. A37. The measurement and review of financial performance is not the same as the monitoring of controls (discussed as a component of internal control in paragraphs A98s of internally-generated information used by management for measuring and reviewing financial performance, and which the auditor may consider, include: Key performance indicators (financial and non-financial) and key ratios, trends and operating statistics. Period-on-period financial performance analyses. IDENTIFYING AND ASSESSING THE RISKS OF MATERIAL MISSTATEMENT THROUGH UNDERSTANDING THE ENTITY AND ITS ENVIRONMENT ISA 315 292 Budgets, forecasts, variance analyses, segment i nformation and divisional, departmental or other level performance reports. Employee performance measures and incentive compensation policies. Comparisons of an entity’s performance with that of competitors. A39. External parties may also measure and review the entity’s financial performance. For example, external information such as analysts’ reports and credit rating agency reports may represent useful information for the auditor. Such reports can often be obtained from the entity being audited. A40. Internal measures may highlight unexpected results or trends requiring management to determine their cause and take corrective action (including, in some cases, the detection and correction of misstatements on a timely basis). Performance measures may also indicate to the auditor that risks of misstatement of related financial statement information do exist. For example, performance measures may indicate that the entity has unusually rapid growth or profitability when compared to that of other entities in the same industry. Such information, particularly if combined with other factors such as performance-based bonus or incentive remuneration, may indicate the potential risk of management bias in the preparation of the financial statements. Considerations Specific to Smaller Entities A41. Smaller entities often do not have processes to measure and review financial performance. Inquiry of management may reveal that it relies on certain key indicators for evaluating financial performance and taking appropriate action. If such inquiry indicates an absence of performance measurement or review, there may be an increased risk of misstatements not being detected and corrected. The Entity’s Internal Control (Ref: Para. 12) A42. An understanding of internal control assists the auditor in identifying types of potential misstatements and factors that affect the risks of material misstatement, and in designing the nature, timing, and extent of further audit procedures. A43. The following application material on internal control is presented in four sections, as follows: General Nature and Characteristics of Internal Control. Controls Relevant to the Audit. Nature and Extent of the Understanding of Relevant Controls. Components of Internal Control. IDENTIFYING AND ASSESSING THE RISKS OF MATERIAL MISSTATEMENT THROUGH UNDERSTANDING THE ENTITY AND ITS ENVIRONMENT 293 ISA 315 AUDITING General Nature and Characteristics of Internal Control Purpose of Internal Control A44. Internal control is designed, implemented and maintained to address identified business risks that threaten the achievement of any of the entity’s objectives that concern: The reliability of the entity’s financial reporting; The effectiveness and efficiency of its operations; and Its compliance with applicable laws and regulations. The way in which internal control is designed, implemented and maintained varies with an entity’s size and complexity. Considerations specific to smaller entities A45. Smaller entities may use less structured means and simpler processes and procedures to achieve their objectives. Limitations of Internal Control A46. Internal control, no matter how effective, can provide an entity with only reasonable assurance about achieving the entity’s financial reporting objectives. The likelihood of their achievement is affected by the inherent limitations of internal control. These include the realities that human judgment in decision-making can be faulty and that breakdowns in internal control can occur because of human error. For example, there may be an error in the design of, or in the change to, a control. Equally, the operation of a control may not be effective, such as where information produced for the purposes of internal control (for example, an exception report) is not effectively used because the individual responsible for reviewing the information does not understand its purpose or fails to take appropriate action. A47. Additionally, controls can be circumvented by the collusion of two or more people or inappropriate management override of internal control. For example, management may enter into side agreements with customers that alter he terms and conditions of the entity’s standard sales contracts, which may result in improper revenue recognition. Also, edit checks in a software program that are designed to identify and report transactions that exceed specified credit limits may be overridden or disabled. A48. Further, in designing and implementing controls, management may make judgments on the nature and extent of the controls it chooses to implement, and the nature and extent of the risks it chooses to assume. IDENTIFYING AND ASSESSING THE RISKS OF MATERIAL MISSTATEMENT THROUGH UNDERSTANDING THE ENTITY AND ITS ENVIRONMENT ISA 315 294 Considerations specific to smaller entities A49. Smaller entities often have fewer employees which may limit the extent to which segregation of duties is practicable. However, in a small owner-managed entity, the owner-manager may be able to exercise more effective oversight than in a larger entity. This oversight may compensate for the generally more limited opportunities for segregation of duties. A50. On the other hand, the owner-manager may be more able to override controls because the system of internal control is less structured. This is taken into account by the auditor when identifying the risks of material misstatement due to fraud. Division of Internal Control into Components A51. The division of internal control into the following five components, for purposes of the ISAs, provides a useful framework for auditors to consider how different aspects of an entity’s internal control may affect the audit: (a) The control environment; (b) The entity’s risk assessment process; (c) The information system, including the related business processes, relevant to financial reporting, and communication; (d) Control activities; and e) Monitoring of controls. The division does not necessarily reflect how an entity designs, implements and maintains internal control, or how it may classify any particular component. Auditors may use different terminology or frameworks to describe the various aspects of internal control, and their effect on the audit than those used in this ISA, provided all the components desc ribed in this ISA are addressed. A52. Application material relating to the five components of internal control as they relate to a financial statement audit is set out in paragraphs A69-A104 below. Appendix 1 provides further explanation of these components of internal control. Characteristics of Manual and Automated Elements of Internal Control Relevant to the Auditor’s Risk Assessment A53. An entity’s system of internal control contains manual elements and often contains automated elements. The characteristics of manual or automated elements are relevant to the auditor’s risk assessment and further audit procedures based thereon. IDENTIFYING AND ASSESSING THE RISKS OF MATERIAL MISSTATEMENT THROUGH UNDERSTANDING THE ENTITY AND ITS ENVIRONMENT 295 ISA 315 AUDITING A54. The use of manual or automated elements in internal control also affects the manner in which transactions are initiated, recorded, processed, and reported: Controls in a manual system may include such procedures as approvals and reviews of transactions, and reconciliations and follow-up of reconciling items. Alternatively, an entity may use automated procedures to initiate, record, process, and report transactions, in which case records in electronic format replace paper documents. Controls in IT systems consist of a combination of automated controls (for example, controls embedded in computer programs) and manual controls. Further, manual controls may be independent of IT, may use information produced by IT, or may be limited to monitoring the effective functioning of IT and of automated controls, and to handling exceptions. When IT is used to initiate, record, process or report transactions, or other financial data for inclusion in financial statements, the systems and programs may include controls related to the corresponding assertions for material accounts or may be critical to the effective functioning of manual controls that depend on IT. An entity’s mix of manual and automated elements in internal control varies with the nature and complexity of the entity’s use of IT. A55. Generally, IT benefits an entity’s internal control by enabling an entity to: Consistently apply predefined business rules and perform complex calculations in processing large volumes of transactions or data; Enhance the timeliness, availability, and accuracy of information; Facilitate the additional analysis of information; Enhance the ability to monitor the performance of the entity’s activities and its policies and procedures; Reduce the risk that controls will be circumvented; and Enhance the ability to achieve effective segregation of duties by implementing security controls in applications, databases, and operating systems. A56. IT also poses specific risks to an entity’s internal control, including, for example: Reliance on systems or programs that are inaccurately processing data, processing inaccur ate data, or both. Unauthorized access to data that may result in destruction of data or improper changes to data, including the recording of unauthorized or non-existent transactions, or inaccurate recording of transactions. IDENTIFYING AND ASSESSING THE RISKS OF MATERIAL MISSTATEMENT THROUGH UNDERSTANDING THE ENTITY AND ITS ENVIRONMENT ISA 315 296 Particular risks may arise where multiple users access a common database. The possibility of IT personnel gaining access privileges beyond those necessary to perform their assigned duties thereby breaking down segregation of duties. Unauthorized changes to data in master files. Unauthorized changes to systems or programs. Failure to make necessary changes to systems or programs. Inappropriate manual intervention. Potential loss of data or inability to access data as required. A57. Manual elements in internal control may be more suitable where judgment and discretion are required such as for the following circumstances: Large, unusual or non-recurring transactions. Circumstances where errors are difficult to define, anticipate or predict. In changing circumstances that require a control response outside the scope of an existing automated control. In monitoring the effectiveness of automated controls. A58. Manual elements in internal control may be less reliable than automated elements because they can be more easily bypassed, ignored, or overridden and they are also more prone to simple errors and mistakes. Consistency of application of a manual control element cannot therefore be assumed. Manual control elements may be less suitable for the following circumstances: High volume or recurring transactions, or in situations where errors that can be anticipated or predicted can be prevented, or detected and corrected, by control parameters that are automated. Control activities where the specific ways to perform the control can be adequately designed and automated. A59. The extent and nature of the risks to internal control vary depending on the nature and characteristics of the entity’s information system. The entity responds to the risks arising from the use of IT or from use of manual elements in internal control by establishing effective controls in light of the characteristics of the entity’s information system. Controls Relevant to the Audit A60. There is a direct relationship between an entity’s objectives and the controls it implements to provide reasonable assurance about their achievement. The IDENTIFYING AND ASSESSING THE RISKS OF MATERIAL MISSTATEMENT THROUGH UNDERSTANDING THE ENTITY AND ITS ENVIRONMENT 297 ISA 315 AUDITING ntity’s objectives, and therefore controls, relate to financial reporting, operations and compliance; however, not all of these objectives and controls are relevant to the auditor’s risk assessment. A61. Factors relevant to the auditor’s judgment about whether a control, individually or in combination with others, is relevant to the audit may include such matters as the following: Materiality. The significance of the r elated risk. The size of the entity. The nature of the entity’s business, including its organization and ownership characteristics. The diversity and complexity of the entity’s operations. Applicable legal and regulatory requirements. The circumstances and the applicable component of internal control. The nature and complexity of the systems that are part of the entity’s internal control, including the use of service organizations. Whether, and how, a specific control, individually or in combination with others, prevents, or detects and corrects, material misstatement. A62. Controls over the completeness and accuracy of information produced by the entity may be relevant to the audit if the auditor intends to make use of the information in designing and performing further procedures. Controls relating to operations and compliance objectives may also be relevant to an audit if they relate to data the auditor evaluates or uses in applying audit procedures. A63. Internal control over safeguarding of assets against unauthorized acquisition, use, or disposition may include controls relating to both financial reporting and operations objectives. The auditor’s consideration of such controls is generally limited to those relevant to the reliability of financial reporting. A64. An entity generally has controls relating to objectives that are not relevant to an audit and therefore need not be considered. For example, an entity may rely on a sophisticated system of automated controls to provide efficient and effective operations (such as an airline’s system of automated controls to maintain flight schedules), but these controls ordinarily would not be relevant to the audit. Further, although internal control applies to the entire entity or to any of its operating units or business processes, an understanding of internal control relating to each of the entity’s operating units and business processes may not be relevant to the audit. IDENTIFYING AND ASSESSING THE RISKS OF MATERIAL MISSTATEMENT THROUGH UNDERSTANDING THE ENTITY AND ITS ENVIRONMENT ISA 315 298 Considerations Specific to Public Sector Entities A65. Public sector auditors often have additional responsibilities with respect to internal control, for example to report on compliance with an established code of practice. Public sector auditors can also have responsibilities to report on compliance with law, regulation or other authority. As a result, their review of internal control may be broader and more detailed. Nature and Extent of the Understanding of Relevant Controls (Ref: Para. 3) A66. Evaluating the design of a control involves considering whether the control, individually or in combination with other controls, is capable of effectively preventing, or detecting and correcting, material misstatements. Implementation of a control means that the control exists and that the entity is using it. There is little point in assessing the implementation of a control that is not effective, and so the design of a control is considered first. An improperly designed control may represent a significant deficiency in internal control. A67. Risk assessment procedures to obtain audit evidence about the design and implementation of relevant controls may include: Inquiring of entity personnel. Observing the application of specific controls. Inspecting documents and reports. Tracing transactions through the information system relevant to financial reporting. Inquiry alone, however, is not sufficient for such purposes. A68. Obtaining an understanding of an entity’s controls is not sufficient to test their operating effectiveness, unless there is some automation that provides for the consistent operation of the controls. For example, obtaining audit evidence about the implementation of a manual control at a point in time does not provide audit evidence about the operating effectiveness of the control at other times during the period under audit. However, because of the inherent consistency of IT processing (see paragraph A55), performing audit procedures to determine whether an automated control has been implemented may serve as a test of that control’s operating effectiveness, depending on the auditor’s assessment and testing of controls such as those over program changes. Tests of the operating effectiveness of controls are further descr

Glass in Architecture Term Paper Example | Topics and Well Written Essays - 2500 words

Glass in Architecture - Term Paper Example The main focus of this paper will be on the architectural use of glass in construction of structures and components of structures. Glass comes in various forms and types. They vary from look, weight, texture and color among other aspects and in this paper we will look deeper and further into the types of glasses and their properties focusing mainly on three types of glass namely; float glass, tempered glass and laminated glass. The paper will also look to discover the implications of each and every type of glass, mentioned above with relation to its structure of design in an architectural point of view. Characteristics and behavior of each type of glass will also be evaluated, and its effects in construction discussed1. Float glass is a type of glass that is forged or made by floating liquid form glass on molten metal still in its liquid form specifically the tin metal which is mostly used, and then allowing the glass to cool and harden. Tin is normally chosen because of its chemical ability to withhold molten glass in its liquid form and allows it to cool where it maintains the smooth liquid surface of the glass, after its hardening and leaves no space for a coarse feeling when the glass dries. Traditionally, glass was made by blowing molten glass or the liquid form of glass and then laying it on a flat surface when still hot and liquid before it has reached the cooling temperature. This has since changed, and the process has become much easier compared to the traditional one. From the floating process, the result is a flat, smooth and an even sheet of glass which can be made into thick or thin flat sheets and also in different sizes, which can be, further resized into small panes depending on the purpose for which the glass was formed to serve. Float glass is commonly made from a fusion of lime and soda, and the process for making this type of glass is also known as the Pilkington process. This type of glass is mostly used for making window panes, a