Personal Bankruptcy and Financial Literacy Essay

Personal Bankruptcy and Financial Literacy - Essay Example The management of the companies should know the implications of the finance to be a successful player in the market. On of the most important measures in the development of the companies is the profit of the company. Therefore, it is imperative for the business to be financially literate. It has become an important subject at individual level after the recession. One of the most important components in the economy is the financial market. Financial Education is needed for the individuals and the organizations in the world to understand the concepts and rationales behind the financial products in the market. They also require recognizing the risks involved with the products so that they can leverage the risk when required. Financial education engulfs education about the financial products and the economy with the help of the charts and the data analysis, which help the companies and the individuals to analyze the market more carefully. (OECD, 26-27). This leads to the development of t he economy in general. The individuals and the companies can take the advantage of a situation in the economy if they are well acquainted with the financial education. After the recession, a major trend in the market was the bankruptcy. The bankruptcy for a company or an individual is a condition when the person or the company is unable to pay the debts. The regulatory authority of the country gives the company or the individual the support to pay off the debts by taking over the assets. (Blum, 337). The importance of bankruptcy has increased in the aftermath of the recession as many companies and individuals took the shelter of the law, as they were unable to pay off the debts. The bankruptcy has a negative effect on the economy of the country in the case of the companies. The companies provide many individuals with jobs and with the closure the unemployment problem rise. However, in the case of the individuals, the bankruptcy

Audit Case Study Example | Topics and Well Written Essays - 2000 words

Audit - Case Study Example The auditor should consider whether to acknowledge the commitment since inherent risk increases the generally risk of the audit. It is often beneficial to set aside transactions into three types- routine, non-routine, and evaluation when valuing inherent risk.   Little Digger’s auditors may not use the system that gives the precise outcome to them, the result is mainly inherited by the risk factors as this system is applied to just a small section of the population as opposed to the whole population. This is prone to the misstatement that is said to be the inherent risk. The term inherent risk is applied in auditing and accounting, if there is higher likelihood of material misstatement within the  financial statement, the inherent risk is considered high .It is also used for the misstatement of the business that is there in the financial statement. If the auditors will not lookout at these inherent perils, there would be more inaccuracies in the financial statement, which certainly will lead the organization to the incorrect direction, and consequently the financial statement will not be presenting accurate and just outlook. The auditors had to come up with ways of making an error free or inherent risk free financial statement in order to make their company move in the precise direction by formulating correct assessments .As per the auditor’s opinion, inherent risk improves the auditor's peril as the inherent risk is an element of it. It is therefore essential to minimize the inherent risk in order to diminish the auditor’s risk. Because of this, the auditors can make improper decisions because the proof to back such view will be false.   Detection risk Detection risk is essentially the risk that the measures applied by the auditors will fail to identify material misstatements in the financial accounts. Auditors in Little Diggers Ltd have to ensure accuracy and efficiency in the business with regard to the asset management, transactio ns, and their documentation in the monetary accounts. Besides this, the auditors look for various methods that aid them in measuring future risks that may affect their business. Auditors use a variety of methods to measure the risk, mainly the  risk due to material misstatement Detection risk is allied to other relations i.e. the trade risk, material misstatement risk and its two major elements, which are the control risk and the inherent risk in general. If the material misstatement risk rises, it will lower the detection risk hence the auditors risk increases. The material risk increases when its essentials; control risk and inherent risk increase. The correlation of the risks will assist the administration and the auditors to try such diverse useful ways that will help reduce on risk levels. Control risk Control risk is the likelihood that a material misstatement exists in an allegation since either that misstatement was not barred from entering entity’s economic stateme nts or it was not identified and approved by the internal control system of the unit. It is the duty of the organization and those responsible with authority to execute internal control system and uphold it properly. However if internal control system is discovering and correcting misstatements then inherent harms will creep in