Business Risk
The concept of this question needs the explanation of inter-relation between business risk and audit risk, which is automatically, must include the risk analysis as an approach to auditing to overcome with the concern of handling these risks.
Before entering deeper to the business risk and how an auditor can manage and be aware of these risks, lets define and describe some of the terms which is related to this question as follows:- Business risk is generally defined as the threat posed by an event or action to a business’s ability to achieve its ongoing objective. For commercial organizations, the primary objective is likely to be the maximization of profit, so business risks can be thought of as anything that will prevent the company making as much profit as possible. Since the opposite of huge profits is huge losses, and companies making huge losses will generally go out of business, I could also think of business risks as being forces pushing a company in the direction of going concern problems.
Business risk measurement is the process by which companies determine what risks the business faces for each part of the operation. There are several different methods used to measure the risk of a business. Every company usually has a department that is responsible for determining the risk of every endeavor in which the company engages.
Internal audit - is an independent management function, which involves a continuous and critical appraisal of the functioning of an entity with a view to suggest improvements thereto and add value to and strengthen the overall governance mechanism of the entity, including the entity 's strategic risk management and internal control system.
External audit-is a periodic examination of the books of accounts and records of an entity. It is carried out by an independent auditor if the books of account are accurate and comply with established concepts, principles, accounting standards, legal requirements and give a true
Before entering deeper to the business risk and how an auditor can manage and be aware of these risks, lets define and describe some of the terms which is related to this question as follows:- Business risk is generally defined as the threat posed by an event or action to a business’s ability to achieve its ongoing objective. For commercial organizations, the primary objective is likely to be the maximization of profit, so business risks can be thought of as anything that will prevent the company making as much profit as possible. Since the opposite of huge profits is huge losses, and companies making huge losses will generally go out of business, I could also think of business risks as being forces pushing a company in the direction of going concern problems.
Business risk measurement is the process by which companies determine what risks the business faces for each part of the operation. There are several different methods used to measure the risk of a business. Every company usually has a department that is responsible for determining the risk of every endeavor in which the company engages.
Internal audit - is an independent management function, which involves a continuous and critical appraisal of the functioning of an entity with a view to suggest improvements thereto and add value to and strengthen the overall governance mechanism of the entity, including the entity 's strategic risk management and internal control system.
External audit-is a periodic examination of the books of accounts and records of an entity. It is carried out by an independent auditor if the books of account are accurate and comply with established concepts, principles, accounting standards, legal requirements and give a true