Financial risk
Financial risk is exposure to potential financial loss or adverse financial outcomes, for example from credit, liquidity, market or financing conditions. In an audit, the significance depends on how the risk may affect amounts, disclosures or going concern. The auditor identifies a concrete financial reporting implication and response.
Worked example
A major customer faces financial difficulty; the auditor evaluates expected credit losses and related disclosures.
Common mistake
Do not stop after naming a financial risk: explain its potential effect on the statements and the work needed.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | AAA (INT) | Supporting | September 2026–June 2027 |