Business risk
Business risk arises from significant conditions, events, circumstances, actions or inactions that could adversely affect an entity’s ability to achieve its objectives and execute its strategies. Some business risks can lead to risks of material misstatement in the financial statements.
Worked example
A major customer loss threatens cash flow and may affect receivable recoverability and going-concern disclosures.
Common mistake
Do not stop at naming a commercial issue: explain how it could affect the financial statements and audit.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | AAA (INT) | Direct | September 2026–June 2027 |
| ACCA | AFM | Supporting | September 2026–June 2027 |
| ACCA | FM | Direct | September 2026–June 2027 |
| ACCA | SBL | Supporting | September 2026–June 2027 |