An inter-industry determination of structural, operational and external agents affecting inherent risk among publicly listed corporations in the Philippines from 2006 to 2010

The Auditing Practices Board defines inherent risk as the susceptibility of an account balance or class of transactions to material misstatement . This is especially important in the rigorous process of auditing, where it plays an integral part in determining the extensiveness of substantive audit m...

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Bibliographic Details
Main Authors: Cheng, Mark Jaychell U., Nuqui, Bonvin G., Ong, James L.
Format: text
Language:English
Published: Animo Repository 2011
Subjects:
Online Access:https://animorepository.dlsu.edu.ph/etd_bachelors/11433
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Institution: De La Salle University
Language: English
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Summary:The Auditing Practices Board defines inherent risk as the susceptibility of an account balance or class of transactions to material misstatement . This is especially important in the rigorous process of auditing, where it plays an integral part in determining the extensiveness of substantive audit measures to be conducted by a firm's auditor. Using a panel data regression approach with secondary data gathered from financial statements of Philippine publicly listed companies, we investigate how structural, operational and external agents contribute to the overall levels of inherent risk. Results show that variables pertaining to extensive growth levels, as well as variables pertaining to financial stagnation, are excellent indicators for inherent risk levels. Furthermore, the Jones model for discretionary accruals has been found to have the best application to the Philippine setting given limited data.