Audit risk and business risk, Auditing

Audit Risk and Business Risk

We saw in earlier studies that audit risk is often categorized as the product of inherent risk, control risk and detection risk.

Auditors should consider business risk in three ways:

(i) By enquiring into and assessing business risk, thereby gaining an excellent knowledge of the business.  This is a basic requirement in all audit engagements.

(ii) By helping their clients to recognize, assess and respond to risk – by welcoming it, ignoring it, managing it, eliminating it, developing a recovery plan, insuring against it etc. This can be a lucrative source of fees. They may also help to eliminate or mange risk, which reduces audit risk in the future.

(iii) By seeing the connection between audit risk and business risk and the risk of misstatement in the financial statements, which focuses the audit or risks likely to lead to possible misstatement.

Posted Date: 12/3/2012 6:25:43 AM | Location : United States







Related Discussions:- Audit risk and business risk, Assignment Help, Ask Question on Audit risk and business risk, Get Answer, Expert's Help, Audit risk and business risk Discussions

Write discussion on Audit risk and business risk
Your posts are moderated
Related Questions
Charities and Non Governmental Organizations Key audit areas: Income: donations therefore are not easy to confirm good internal control is needed particularly o

Valuation and Income - Verification Procedures Valuation Valuation of listed securities is easily conformed along with suitable financial publications. Directors' valua

Sundry Debtors and Loans Sundry debtors and loans are not generally material assets of companies another than those companies whose business is to create loans.  We shall cons


Assertions about account Assertions about account balances at the duration end: a) Existence -assets, equity and liabilities interests exist. b) Obligations and Ri

Verification of Liabilities - Audit Process Usually speaking, the auditor's duty along with regard to liabilities can be summarised follows as: 1. To confirm the existence of

International, Assurance Auditing, Standards Board (IAASB) The prologue to the International Standards on Quality Control, Auditing, Assurance and Related Services is issued to

the availability of audit evidence is necessary but not sufficient condition for absolute reliance on the figure presented for audit

What is an audit, what financial records are available and what is their individual function in completing your audit? Audit is an independent examination of financial informat

Contingencies and Provisions (i) Receive the client's schedule of provisions and seek and contingencies supporting documentation in the form of legal opinions, correspondence