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
IAS 40 Investment Properties Audit work common to all kinds of land and building will be used to establish ownership, existence and price. IAS 40 requires such companies may a

Procedures in Evaluating the Work of Expert The auditor must get reasonable assurance which the expert's work constitutes suitable audit evidence in based of the financial inf

discuss the verification procedure of current assets and long term liabilties

should your test for unrecorded liabilities be affected by the fact that a letter is obtained in which a responsible management official certifies that to the test of his knowledge

Work In Progress What such applies to goods for resale applies uniformly to work in progress even when the items present greater problems of valuation and ascertainment to the

In planning the audit work of the Ministry, the audit staff member collected these details relating to the construction of an office complex. 1. In September 1994, the Ministry

Examine consignment agreement s and contracts

Examples of Liabilities Examples of those liabilities are: a) Claims by employees for injury at work such should be covered through workman's compensation; b) Claims thr

The following situations involve a possible violation of the MIA ByLaws (on professional ethics, conduct and practice). For each situation, (1) decide whether or not the Code has b

Trademarks and Patent Trademarks and then written off over their useful lives and patents may be capitalized along with any renewal fees being charged to revenue. Whether a tr