Chapter 9. When they defines Inherent risk as “the set for segments…..”, what does segment mean?
“Segment” as in segment of financial statements that you have learned in ACCT302. For our purpose, you may consider segment here to be the same as classes of transactions or account balances. Chapter 4. Regarding forseen 3rd parties, is it necessary for the auditor to have prior knowledge of the forseen 3rd class? Also, I am not certain on the issue of CPC Rule 503. My understanding is that CPA’s cannot recommend products or services to the client for a commission unless the commission is a referral fee $$ for referring services. However, multiple choice question 3-16a. proves otherwise, stating such an exception is in violation of the code. Please help clarify. Yes. Auditor must have prior knowledge of ONE of the forseen 3rd parties. The rest of the 3rd parties who are in the same class or membership as the ONE whose is known to the auditor (e.g., a group of bankers, a union of suppliers, etc) can take class action 3rd parties law suit against the same auditor. That CPA question was s
