country
$20 Bonus + 25% OFF
Securing Higher Grades Costing Your Pocket? Book Your Assignment at The Lowest Price Now!

Complete Guide To Business Risk Management

tag 0 Download10 Pages / 2,368 Words tag Add in library Click this icon and make it bookmark in your library to refer it later. GOT IT

Question:

Discuss about the Complete Guide to Business Risk Management.
 
 

Answer:

Introduction:

Auditing is a strategic management approach that plays a key role in ensuring that a company is moving towards achieving its goals and objective as well as improving its performance standards. Auditing and assurance practices are outlined as the general and independent examination of statutory records, documents, asset, and books of accounts of a company to establish if the financial plan and also the non-financial disclosures square measure presenting a real and honest read of a company (Arens, et al., 2012). The main aim of conducting audit practices is to confirm that the book of accounts is correctly maintained as required by the international auditing and accounting bodies.

The external audit activities are explained as the examination and securitizing the organization book, documents, and asset, this activity are normally carried out by the external auditor who is in charge of proving audit opinion which is relevant to the company operation. The findings of an auditor will determine the actions to be taken by the organization management while striving to improve their operations (Elder, et al., 2011). Clarke & Johnson (CJI) is an organization that is projected to have provided excellence and brilliant services to Luxury Travel Holidays LTD (LTH), and a result, Luxury Travel Holidays LTD (LTH) has projected to give Clarke & Johnson (CJI) another year of business partnering. Despite the fact that the two companies have been partnering,  Clarke & Johnson (CJI) independence will be affected to some extent, this implies that there are some threats that affect the independence of the external auditor (Eilifsen, et al., 2013).

Self-interest threat could be a fatal issue that affects the independence of an external auditor. This threat is perceived once the auditor is often providing audit services to only one client. Luxury Travel Holidays LTD (LTH) has re-engaged Clarke & Johnson (CJI) Company to supply their service just like the previous year (Johnstone, 2000). The aspect of self-interest forces the auditor to accept an offer to provide audit services, this is the perception of not losing the client, and this will affect the independence of external auditor since the client will provide different opinion which affects the opinions of the auditor (Jackson, 2016).

The issue relating to the referrals from the client affects the independence of the external auditor. According to the study, Clarke & Johnson (CJI) Company is an organization that has been providing audit services to Luxury Travel Holidays LTD (LTH); Luxury Travel Holidays LTD (LTH) could make many referrals to the auditor, and thus affecting the audit opinions of the Clarke & Johnson (CJI) Company. The organizational management has a great impact on the audit opinions to be made by the auditor, the top management could influence this opinions since they will force the auditor to utilize the referrals made (Kachelmeier, et al., 2014). Luxury Travel Holidays LTD (LTH) and Clarke & Johnson (CJI) Company have been partnering, the top management of the Luxury Travel Holidays LTD (LTH) could refer the accounting department to make some irrelevant changes to the books of accounts, these changes may affect the opinion to be given by the auditor (Knechel & Salterio, 2016).

 

Safeguards to threats that affects the independence of an auditor

The threats that affect the independence of external auditors are outlined to influence the activities and the conclusion to be made by an auditor.  Multiple referrals from the top management, self-interest and the familiarity and complacency are the examples threats derived from the case study (Bell, et al., 2001). When an external auditor is hindered, the audit opinion which is used during the drafting of the could be appropriate to the findings of the auditor the audit opinion forms the basis of the audit report. Self-interest is a critical threat which implies self-consideration of an individual, the top management may decide to provide ideas to the auditors, these ideas could affect the conclusions of the external auditor (Knechel & Salterio, 2016). The Multiple referrals reflect those referrals that are made by departmental managers or the top managers of the organization, where these referrals comprise referring the auditor to use specific books of accounts or to use information from one of the organizational employees (William Jr, et al., 2016).

Self-interest issues affecting the independence of an auditor implies impact of making referrals and suggestions to the auditor, some of the managers in an organization may have messed up with the company policies, assets and books of accounts so they are compelled to make suggestions to the auditors (Ricchiute, 2001). On the other hand, some of them may want praises from board of directors so they are forced to make suggestions to the auditors, and thus affecting the drafted report. Clarke & Johnson Company is encouraged to reduce the interaction with the clients, they need to make opinion based on the immediate findings of the company operations.

Multiple referrals from Luxury Travel Holidays LTD (LTH) has a direct impact to the audit opinion to be provided by Clarke & Johnson Company. Luxury Travel Holidays LTD (LTH) has re-engaged Clarke & Johnson Company to continue providing audit services, Chris is the top manager of Luxury Travel Holidays LTD (LTH) (Gay & Simnett, 2000). Chris could make suggestions and recommendation to the auditor, this affects the independence of the auditor. Clarke & Johnson Company is required not to accept any suggestion or recommendation made by any member of the organization, auditor need to take caution of such issue so that they could provide appropriate audit opinion and report.

Audit planning is an important area of auditing practices, it primarily conducted at the beginning of the auditing process to ensure that the appropriate attention is conducted to the important areas of the company (Jackson, 2016). The audit is the risk which implies the financial record of the enterprise are devoted to being materially incorrect although the audit report provided by the auditors states that the financial statements of the company are free of any misstatement. The primary purpose of encouraging the auditors to have audit planning to so enhance that the important areas and documents of the company are critically scrutinized, by conducting the audit planning the auditors are able to identify the potential audit problems that could affect the audit process (Knechel, 2007).

Auditors are encouraged to ensure that they develop an audit plan and implement policies stated since it will allow them to expose their professionalism during the auditing process. During Audit planning, the Auditor is obligated to ensure that they are ready for audit planning risk that may affect their operations (Eilifsen, et al., 2001). Crampton and Hasaad is encouraged to develop the audit planning which will allow them to exhibit their professionalism during their auditing process.

 


Mining Supplies LTD (MSL) is a multinational corporation that operates in the international market. It operates in China, Europe, and U.S market.  Mining Supplies LTD (MSL) is about to conduct its  2015 annual general meetings the meeting will allow the provisions of 2015 financial reporting. Mining Supplies LTD (MSL), Crampton and Hasaad are encouraged to develop the audit plan that will give the exhaustive approach of audit timing, extent and strategies that will ensure that the audit work is completed. Mining Supplies LTD (MSL) is a company that performs its services outside its market, operating in an international market is bounded with allot of risk (Kachelmeier, et al., 2014).

The international business affects the activities of multinational companies, the international business concepts are perceived to have the great impact on the auditing process. An organization that operates in an international market is encouraged to deliver their products and services in time, they are also mandated to implement the strategic chain management measure that will allow the company to operate easily in the international market (Eilifsen, et al., 2001). Mining Supplies LTD (MSL) is a company that operates its sales in the large market, Crampton and Hasaad Company on other hand is an audit company that provides its services to international companies including the Mining Supplies LTD (MSL). While mitigating the logical risk that affects the audit planning of an auditor, the companies are encouraged to implement on the supply chain mythologies, this will reduce the negative factors relating to political unrest and other fatal factors. However, the companies are encouraged to provide exclusive license which is guided by the substantial agreement between the two companies (Lyon & Maher, 2005).

 

Decline in product demand risk

Mining Supplies LTD (MSL) is an international corporation that is involved in producing the engineering equipment to its clients, the company products are internationally recognized. Declining in producing the equipment affects the activities of the company; reduction of equipment produced will definitely affect the profitability making of the company. Demand risk implies the reduction in the demand for the product, the declining demand for the engineering equipment may be because of stiff competition and high pricing of the equipment (Arens, et al., 2012). While mitigating the risk associated with the products and demand risk, the company is encouraged to ensure that conducts market research in order to determine the aspects that affect their business operations.

Mining Supplies LTD (MSL) and Crampton and Hasaad are the business organization that operates in international business market. The legal risk reflects the impacts of the regulations and rules that are drafted by the existing governments, the companies that operates their business activities above the existing rules and regulation are encouraged to observe the law of the land (Messier, 2014).  Legal risk affect the operation of Mining Supplies LTD (MSL) and Crampton and Hasaad since they operate in different markets, rules and regulations in the different market keep own changing and thus affecting the business activities of an organization. For instance, both companies are perceived to work in US  and Europe markets, U.S Common Laws provides some policies that need to be observed by the companies operating in that particular market, on the other hand, European Civil Laws provide regulatory measures to the companies operating in the European market (Eilifsen, et al., 2001).

Financial risk is those factor that affects the financial operations of an organization. Companies that operates in the international market are faced with many risks including the financial risk. Crampton and Hasaad Company and Mining Supplies LTD (MSL) are operating companies they have diverse their business activities. The diversification of the business activities will bound the companies into financial risk, economic factor is the concepts, which affects the financial operation of an international company. For instance, the US dollar is a currency that is used in the international market, the down-turning of  this currency affect the business activities of operating companies.

The inherent risk are the risk that involves material misstatement in the financial records and asset document of the business company, the risk arises as a result of errors and emission made by the company accountings.  The inherent risk is perceived to affect the organizations that operate in the international market, these companies involves themselves with the inherent risks when they failed to make relevant estimation as well as when they need to make complex transactions (Eilifsen, et al., 2001).

 


The control audit risk implies the risks that relate to the material misstatement in the financial statement, this misstatement is arising due to failure to implement the control measures of the company. Crampton and Hasaad Company and Mining Supplies LTD (MSL) are encouraged to adequately advised to have the relevant internal control system that will prevent and detect the potential errors and frauds. The control risk are perceived to be high, especially when the business entity is not having the internal control measures (Jackson, 2016).

The detection risk is that risk that arises when the auditor fails to detect the material misstatement in the financial records, and asset of the company. In order to operate with less limiting factors, Crampton and Hasaad Company is encouraged to apply the audit process measures this will allow the company to automatically detect material misstatements in the financial statements and asset documents of Mining Supplies LTD (MSL). While mitigating the detection risk, the audit firm is advised to increase the number of the sample transaction taken during the audit process (Sadgrove, 2016).

 

References

Arens, A. A., Elder, R. J. & Mark, B., 2012. Auditing and assurance services: an integrated approach:. Boston: Prentice Hall..

Bell, T. B., Landsman, W. R. & Shackelford, D. A., 2001. Auditors' perceived business risk and audit fees: Analysis and evidence.. Journal of Accounting research,, 39(1), pp. 35-43.

Eilifsen, A., Messier, W. F., Glover, S. M. & Praw, 2013. Auditing and assurance services.. s.l.:McGraw-Hill..

Eilifsen, A., Knechel, W. R. & Wallage, P., 2001. Application of the business risk audit model: A field study. Accounting Horizons. s.l.:s.n.

Elder, R. J., Beasley, M. S. & Arens, A., 2011. Auditing and Assurance services. s.l.:Pearson Higher Ed..

Gay, G. E. & Simnett, R., 2000. Auditing and assurance services in Australia.. Sydney: Mcgraw-hill.

Jackson, R. A., 2016. Business at risk: keynote speakers for this year's IIA International Conference identify emerging risks facing organizations. Internal Auditor,. In: s.l.:s.n., pp. 40-46.

Johnstone, K., 2000. Client-acceptance decisions: Simultaneous effects of client business risk, audit risk, auditor business risk, and risk adaptation. Auditing:. A Journal of Practice & Theory, 19(1), pp. 1-25..

Kachelmeier, S. J., Majors, T. & Williamson, M. G., 2014. Does Intent Modify Risk-Based Auditing?. The Accounting Review. s.l.:s.n.

Knechel, W., 2007. The business risk audit: Origins, obstacles and opportunities.. In: s.l.:s.n., pp. 383-408.

Knechel, W. R. & Salterio, S. E., 2016. Auditing: assurance and risk. s.l.:Routledge.

Lyon, J. D. & Maher, M. W., 2005. The importance of business risk in setting audit fees: Evidence from cases of client misconduct.. Journal of Accounting Research, 43(1), pp. 133-151.

Messier, w. f., 2014. An approach to learning risk-based auditing.. Journal of Accounting Education, 32(3), pp. 276-287.

Ricchiute, D. N., 2001. Auditing and assurance services.. s.l.:South Western Educational Publishing..

Sadgrove, K., 2016. The complete guide to business risk management.. s.l.:Routledge.

William Jr, M., Glover, S. & Prawitt, D., 2016. Auditing and assurance services: A systematic approach.. s.l.:McGraw-Hill Education.

Download Sample

Get 100% money back after download, simply upload your unique content* of similar no. of pages or more. We verify your content and once successfully verified 100% value credited to your wallet within 7 days.

Upload Unique Document

Document Under Evaluation

Get Credits into Your Wallet

*The content must not be available online or in our existing Database to qualify as unique.

Cite This Work

To export a reference to this article please select a referencing stye below:

My Assignment Help. (2018). Complete Guide To Business Risk Management. Retrieved from https://myassignmenthelp.com/free-samples/complete-guide-to-business-risk-management.

"Complete Guide To Business Risk Management." My Assignment Help, 2018, https://myassignmenthelp.com/free-samples/complete-guide-to-business-risk-management.

My Assignment Help (2018) Complete Guide To Business Risk Management [Online]. Available from: https://myassignmenthelp.com/free-samples/complete-guide-to-business-risk-management
[Accessed 11 July 2020].

My Assignment Help. 'Complete Guide To Business Risk Management' (My Assignment Help, 2018) <https://myassignmenthelp.com/free-samples/complete-guide-to-business-risk-management> accessed 11 July 2020.

My Assignment Help. Complete Guide To Business Risk Management [Internet]. My Assignment Help. 2018 [cited 11 July 2020]. Available from: https://myassignmenthelp.com/free-samples/complete-guide-to-business-risk-management.


Myassignmenthelp.com is committed to ease out the life of students with unmatched help on assignments, homework/coursework, dissertation, essays, research papers and others. Our fast turnaround time along with low prices ensures that students flock to us in 100s. The best part is that one gets top quality works at minimum prices along with expert guidance from a large number of PhD Scholars.

Latest Audit Samples

ACC707 Auditing And Assurance Services 5

Download : 0 | Pages : 12
  • Course Code: ACC707
  • University: Kings Own Institute
  • Country: Australia

Answer: Introduction Over the years, many large corporate collapses and business failures took place in the business sector of Australia such as HIH Insurance, Ansett Australia, OneTel and Harris Scarfe. Therefore, the corporate sector of Australia had to face many adverse long-term impact of these business failures and corporate collapses; and the auditing profession has been majorly affected with the same (Betta, 2016). This report emphasiz...

Read More arrow Tags: Australia Auburn 35 auditing and assurance services Kings own Institute 

BUACC5935 Auditing And Assurance Services

Download : 1 | Pages : 6
  • Course Code: BUACC5935
  • University: Federation University
  • Country: Australia

Answers: 1. The four main major risks of Woodside Petroleum for the process of business are the climate change risk management, risk of overrunning the costs of the business, risk of non-compliance with the legal requirements and the risk of not delivering sufficient returns to the shareholders. As the business is mainly involved in the process of petroleum exploration and oil and gas sector, the pressure from the environmental groups is ever...

Read More arrow Tags: Australia 35 Auditing and Assurance Services Federation University 

HI6026 Audit Assurance And Compliance 6

Download : 0 | Pages : 8

Answer: Week 1: Q1) Type of engagements required and level of assurance needed on Audit of Management accounts for the year ended 30thJune 2017 As an audit manager for OEL, my role is to show whether the management accounts for Local Pty Ltd for the year ended 30th June 2017 reflect a true and fair position of the company. Three major assurances are ordered in the increasing level of rigor. They include compilations, reviews and au...

Read More arrow Tags: Australia 35 audit  assurance and compliance Holmes Institute 

HA3032 Auditing 6

Download : 0 | Pages : 7

Answers: 1. Providing advice on accounting policies and accounting services, is a part of the assurance engagement, as it is the responsibility of the auditor to check whether the books of the company have been prepared based on the standard accounting and auditing practices and in case there are any errors than the auditor should state the same in their audit report and also discuss with management of the company on how they can improve it...

Read More arrow Tags: Australia 35 Auditing Holmes Institute 

HI6026 Audit Assurance And Compliance 5

Download : 0 | Pages : 8

Answers: 1: Auditing is the process of checking and inspecting all the books of accounts in order to find errors and manipulations in them if any and to make an assurance about the true and fair view of the financial statements. There are various types of audit according to its functions and objectives and an individual person having competent knowledge can be appointed for such audit. In the given case study, it can be observed that the Over...

Read More arrow Tags: Australia Randwick 35 Audit Assurance and Compliance Holmes Institute 
Next
watch

Save Time & improve Grade

Just share Requriment and get customize Solution.

question
We will use e-mail only for:

arrow Communication regarding your orders

arrow To send you invoices, and other billing info

arrow To provide you with information of offers and other benefits

1,359,640

Orders

4.9/5

Overall Rating

5,081

Experts

Our Amazing Features

delivery

On Time Delivery

Our writers make sure that all orders are submitted, prior to the deadline.

work

Plagiarism Free Work

Using reliable plagiarism detection software, Turnitin.com.We only provide customized 100 percent original papers.

time

24 X 7 Live Help

Feel free to contact our assignment writing services any time via phone, email or live chat.

subject

Services For All Subjects

Our writers can provide you professional writing assistance on any subject at any level.

price

Best Price Guarantee

Our best price guarantee ensures that the features we offer cannot be matched by any of the competitors.

Our Experts

Assignment writing guide
student rating student rating student rating student rating student rating 5/5

1265 Order Completed

97% Response Time

James Cook

Masters in Management

Wellington, New Zealand

Hire Me
Assignment writing guide
student rating student rating student rating student rating student rating 5/5

2109 Order Completed

99% Response Time

Emma Zhong

Ph.D in Project Management with Specialization in Project Communications Management

Singapore, Singapore

Hire Me
Assignment writing guide
student rating student rating student rating student rating student rating 5/5

529 Order Completed

95% Response Time

Ivan Blank

PhD in Functional Human Biology

Wellington, New Zealand

Hire Me
Assignment writing guide
student rating student rating student rating student rating student rating 5/5

755 Order Completed

95% Response Time

Douglas Cowley

Masters in Finance with Specialization in Audit

Wellington, New Zealand

Hire Me

FREE Tools

plagiarism

Plagiarism Checker

Get all your documents checked for plagiarism or duplicacy with us.

essay

Essay Typer

Get different kinds of essays typed in minutes with clicks.

edit

GPA Calculator

Calculate your semester grades and cumulative GPa with our GPA Calculator.

referencing

Chemical Equation Balancer

Balance any chemical equation in minutes just by entering the formula.

calculator

Word Counter & Page Calculator

Calculate the number of words and number of pages of all your academic documents.

Refer Just 5 Friends to Earn More than $2000

Check your estimated earning as per your ability

1

1

1

Your Approx Earning

Live Review

Our Mission Client Satisfaction

perfect! this expert did a good job and answered all sections of the task with good content also.

flag

User Id: 368960 - 11 Jul 2020

Australia

student rating student rating student rating student rating student rating

My Assignment finished earlier then my expected date that I paid for. I was very happy with their services. Papers was very professional with perfect APA formatting. I have been using My Assignment services fir a few months and happy with my papers,...

flag

User Id: 436537 - 11 Jul 2020

Australia

student rating student rating student rating student rating student rating

Hello, this is help a lot while working full time and full time mother. Thank you very much.

flag

User Id: 264788 - 10 Jul 2020

Australia

student rating student rating student rating student rating student rating

Thanks for the great work! You listened to my requests for revisions and delivered the work ahead of schedule.

flag

User Id: 451901 - 10 Jul 2020

Australia

student rating student rating student rating student rating student rating
callback request mobile
Have any Query?