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Hi,
Can anyone tell me what is business risks with examples?
Also, to what extend (if any) weaknesses in Internal Control systems of coys are relevant to BR?
does the following apply?:
BR = Inherent Risk, and
F/S Risk = IR x CR
Audit Risk = IR x CR x DRBusiness risks are risks that could impact on a company’s profitability and going concern status.
examples are,
– legal claims against the company which will impact on profitanility if no insurance cover & if very significant could increase doubt over going concern.
– fines (possible closure) from non compliance with laws/regulation.
– propsed withdrawal of operating licence in industries where this is important to operate.
– loss of key employees in a specialised market with shortage of such skills and where company is dependent on skills/know-how of such employees for its operation.your formulas are correct with the exception of Business risk which is explained above.
Just to add F/S risks are risks that transactions have been wrongly classified, incorrectly entered, omitted, inaccurate figures, not currectly presented (e.g discontinued operations) and no sufficient, adequate disclosures made.
Hope this helps.
thanks.
Osa
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