This Financial Reporting Alert is intended to be used by members of an organization’s financial management and audit committee to identify and understand current accounting and regulatory developments affecting the organization’s financial reporting. This alert is intended to help you achieve a more robust understanding of the economic and business environment in which your organization operates and is also an important tool in helping you identify the significant risks that may result in the material misstatement of your organization’s financial statements.
Specifically, in this alert you will find information on recent issues that affect your organization such as:
You will also find information on emerging issues such as:
This document has not been approved, disapproved, or otherwise acted on by a senior technical committee of the AICPA.
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Understanding Your Organization and Its Environment to Assess Risks
| Your organization’s financial statements will be subject to specific risks of material misstatement arising from the nature of the business, the degree of regulation, or other external forces affecting the business, but this alert will help you better assess these risks to implement appropriate controls. |
As a member of an organization’s financial management or audit committee, it is important for you to have a sufficient understanding of the organization and the current environment in which it operates to perform not only an adequate risk assessment, but also an opportunity assessment for the organization. A proper risk assessment will assist you in understanding the risk that your organization’s financial statements may be misstated. An understanding of the organization and the environment in which it operates may consist of an understanding of the following aspects:
Your organization’s financial statements will be subject to specific risks of material misstatement arising from the nature of the business, the degree of regulation, or other external forces affecting the business (for example, political, economic, social, technical, and competitive forces).
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