Audit Approach and Company Bonuses

#1

Bonuses are becoming an increasingly more important component of remuneration at all levels of an organisation.

How much of an impact on the audit approach is this having?

I believe that bonuses are now so prevalent that they are increasing audit risk. Do firms look at how bonuses are calculated and direct additional audit testing to ensure that the company’s shareholders are not being prejudiced? This prejudice may include unnecessary trading or selling cars to company employees then selling them on.

#2

Seang
I think that you do have a point. I’ve recently read about a whistleblower alledging that tax officials were over-charging businesses so that they met targets.
On this basis, it is a problem and needs extra audit effort.

#3

Guys,
I agree with both of you. People chasing bonuses are under more pressure and I guess some will inevitably be tempted to find a way to improve their figures.