TaBLE 6-2 The Two SAs 82 Categories of risk Factors for Misappropriation of Assets and Two Examples of each CATEGORY 1 CATEGORY 2 Susceptibility of Assets to Misappropriation Controls These pertain to the nature of an entity 's assets These involve the lack of controls designed to and the degree to which they are subject to theft prevent or detect misappropriations ofassets Examples of risk Factors Examples of risk Factors Large amounts of cash on hand or processed Lack of appropriate management oversight Easily convertible assets, such as bearer such as inadequate supervision or monitorin bonds, diamonds, or computer chips of remote locations Fixed asset characteristics. such as small assets susceptible to misappropriation ctl a Inadequate record keeping with respec size, marketability, or lack of ownership identification Lack of timely and appropriate documentation for transactions. such as credits for merchand ise Arens, Loebbecke; Auditing, 8/E @2000 Prentice Hall. InArens, Loebbecke; Auditing, 8/E ©2000 Prentice Hall, Inc. TABLE 6-2 The Two SAS 82 Categories of Risk Factors for Misappropriation of Assets and Two Examples of Each CATEGORY 1 Susceptibility of Assets to Misappropriation These pertain to the nature of an entity’s assets and the degree to which they are subject to theft. CATEGORY 2 Controls These involve the lack of controls designed to prevent or detect misappropriations of assets. Examples of Risk Factors • Large amounts of cash on hand or processed • Easily convertible assets, such as bearer bonds, diamonds, or computer chips • Fixed asset characteristics, such as small size, marketability, or lack of ownership identification Examples of Risk Factors • Lack of appropriate management oversight such as inadequate supervision or monitoring of remote locations • Inadequate record keeping with respect to assets susceptible to misappropriation • Lack of timely and appropriate documentation for transactions, such as credits for merchandise returns