...Enterprise Risk Assessment, Audit, and Cyberlaw Enterprise Risk Assessment, Audit, and Cyber law Enterprise Risk Assessment “Today’s business world is constantly changing—it’s unpredictable, volatile, and seems to become more complex every day. By its very nature, it is fraught with risk.” (PWC, 2008) Risk assessment provides us with a process which enables us to identify which risks symbolize opportunities and which represent possible dangers. Correctly performed, a risk assessment gives organizations a clear assessment of variables to which the organization could be exposed to, these could be indemnified either as internal or external, retrospective or forward-looking. A company faces many issues when it comes to operating a business; they included risks such as IT risks, operations risk, financial risks, strategic market risks, legal risks, reputation risks, and human capital risks. For the risk assessment to provide significant finding, certain important values should be considered. Your organization’s objectives that drives your values should be considered at the beginning and end of this risk assessment. These objectives offer the basics for determining the effectiveness and probability of your organization’s risk rating. Control throughout the assessment process need to be clearly known and followed to nurture a holistic approach and a portfolio view—one that will provide you the best responses based on the organization’s risk ratings...
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...Enterprise Risk Assessment, Audit, and Cyberlaw Enterprise Risk Assessment, Audit, and Cyber law Enterprise Risk Assessment “Today’s business world is constantly changing—it’s unpredictable, volatile, and seems to become more complex every day. By its very nature, it is fraught with risk.” (PWC, 2008) Risk assessment provides us with a process which enables us to identify which risks symbolize opportunities and which represent possible dangers. Correctly performed, a risk assessment gives organizations a clear assessment of variables to which the organization could be exposed to, these could be indemnified either as internal or external, retrospective or forward-looking. A company faces many issues when it comes to operating a business; they included risks such as IT risks, operations risk, financial risks, strategic market risks, legal risks, reputation risks, and human capital risks. For the risk assessment to provide significant finding, certain important values should be considered. Your organization’s objectives that drives your values should be considered at the beginning and end of this risk assessment. These objectives offer the basics for determining the effectiveness and probability of your organization’s risk rating. Control throughout the assessment process need to be clearly known and followed to nurture a holistic approach and a portfolio view—one that will provide you the best responses based on the organization’s risk ratings...
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...cONcEPT Of AUDIT RISK, MAKINg REfERENcE TO THE KEY AUDITINg STANDARDS WHIcH gIVE gUIDANcE TO AUDITORS AbOUT RISK ASSESSMENT. 01 TEcHNIcAL audit risk RELEVANT TO AccA QUALIfIcATION PAPERS f8 AND P7 AND This article outlines and explains the concept of audit risk, making reference to the key auditing standards which give guidance to auditors about risk assessment. Identifying and assessing audit risk is a key part of the audit process, and ISA 315, Identifying and Assessing the Risks of Material Misstatement Through Understanding the Entity and Its Environment, gives extensive guidance to auditors about audit risk assessment. The purpose of this article is to give summary guidance to CAT Paper 8, Paper F8 and P7 students about the concept of audit risk. All subsequent references in this article to the standard will be stated simply as ISA 315, although ISA 315 is a ‘redrafted’ standard, in accordance with the International Auditing and Assurance Standards Board (IAASB) Clarity Project. For further details on the IAASB Clarity Project, read the article by Lisa Weaver, examiner for Paper P7, in the August 2009 issue of Student Accountant. WHAT IS AUDIT RISK? According to the IAASB Glossary of Terms1, audit risk is defined as follows: ‘The risk that the auditor expresses an inappropriate audit opinion when the financial statements are materially misstated. Audit risk is a function of material misstatement and detection risk.’ WHY...
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...Risk-Based IT Audit Risk-Based Audit Methodology Apply to Organization’s IT Risk Management Kun Tao (Quincy) Cal Poly Pomona Author Note This paper was prepared for GBA 577 Advanced IS Auditing, taught by Professor Manson. March 2014 Page 1 of 26 Risk-Based IT Audit Table of Contents Abstract .......................................................................................................................................... 3 Introduction .................................................................................................................................... 4 Methodology................................................................................................................................... 6 Risk-based auditing methodology: Risk assessment...................................................................... 6 IT Risk Management................................................................................................................... 7 IT Risk Control Framework........................................................................................................ 8 Identifying assets...................................................................................................................... 13 Determining criticality and confidentiality levels......................................................................14 Threat and vulnerability identification................................................................
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...|Details of Assessment | |Term and Year |3, 2013 |Time allowed |Week 9 | |Assessment Type |Assignment |Assessment Weighting |20% Total | |Date | |Room | | |Details of Subject | |Qualification |FNS60210 Advanced Diploma of Accounting | |Subject Name |Auditing and Reporting | |Details of Unit(s) of competency | |Unit Code |FNSACC602A |Unit Title |Audit and Report on Financial systems and records | |Details of Student | |Student...
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...assignment is titled “Implementing the IT-Related Aspects of Risk-Based Auditing Standards”. It is an overview of the importance of performing a Risk-based audit and the necessary steps auditors take in implementing risk assessment within their audit. Two sets of standards drove the need for risk assessment for IT controls. The first; AICPA SAS 104-111 (Risk Assessment Standards Toolkit) which covers the risk assessment standards and the key points auditors need to consider when incorporating them in an audit. Second, PCAOB AS 5; Audit of Internal Control over Financial Reporting that is Integrated with an Audit of inherent risk. My paper will cover the following topics outlined in the article: benefits of risk-based auditing, planning a risk assessment procedure, gaining an understanding of the IT environment, risk assessment, determining whether further audit procedures (FAP) are necessary, designing and performing FAP, and evaluating Audit Findings. Recommended approach and Benefits of Risk-Based Auditing The layout of the article closely resembles the top-down approach that is required by AS 5. This approach is basically how the auditor performs their auditing procedures; not necessarily the order in which they do them. Top-down “begins at the financial statement level and with the auditor’s understanding of the overall risks to internal control over financial reporting” (www.pcaobus.org). The benefits of risk-based auditing include: (1) identifying and understanding how...
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...content (a) Explain the audit risk and each component of the audit risk model and how the audit risk works Audit risk is the auditor might give an incorrect or inappropriate opinion the financial statements. (Taylor, 2008). The audit risk model expresses the relationship among the audit risk components as follows: PDR = AAR IR x CR PDR = planned detection risk AAR = acceptable audit risk IR= inherent risk CR= control risk The four risks in the audit risk model are appropriately important to valuable detailed discussion. All four risks are discussed briefly in this section o provide an overview of the risks. Planned detection risk (PDR) is a measure of that audit evidence for a segment will fail to detect misstatements exceeding an acceptable amount, should such misstatements exists. (James, 2001) PDR is a function of the effectiveness of an audit test and of its application by the auditor. Decreases in PDR will require the auditor to increase the competence and sufficiency of audit evidence collected. (Taylor, 2008). Inherent risk (IR) represents the auditor’s assessment of the susceptibility of an assertion to a material misstatement assuming there are no related internal controls. (Boynton, 2001). If the auditor concludes that there is a high likelihood of misstatements, ignoring internal control, the auditor would conclude that inherent risk is high. Factors that affect...
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...Section 5 Audit Process: Audit Planning To Fieldwork Section 5 documents how the Office of the City Auditor complies with standards related to reasonable assurance, significance, audit risk, and planning. This section provides guidance on the how to apply those standards in conducting audits based on the Citywide Risk Assessment model or requested audits. Specifically, this section will cover the initial planning phase of the audit (preliminary survey) that begins with start the audit, preliminary survey and risk assessment, and development of the audit program. The purpose of audit planning process is to generate information and ideas to better understand the audit subject, determine the audit objective, and to develop the audit field work program. Planning also involves estimating the time and resources necessary to complete the audit. The evidence gathered in background research and later fieldwork is documented in the working papers. Key outputs of audit planning include an audit background memorandum; audit scope statement; risk and vulnerability assessment document; and field work audit program. AUDIT PLANNING PROCESS The audit planning process can be divided into the following three phases: 1) starting the project, 2) preliminary survey (planning the audit and conducting risk assessment), and 3) developing the audit program. These steps are followed by fieldwork and reporting. Details of each of the steps are noted below. Audit Start City Auditor assigns staff to audit. City...
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...AUDITING RISKS Stacy Jones 07/29/2015 AC503: Advanced Auditing Prof: Cynthia Waddell Audit Risk is the risk that an auditor expresses an inappropriate opinion on the financial statements. Audit risk may be considered as the product of the various risks which may be encountered in the performance of the audit. In order to keep the overall audit risk of engagements below acceptable limit, the auditor must assess the level of risk pertaining to each component of audit risk. Audit risk may be considered as the product of the various risks which may be encountered in the performance of the audit. In order to keep the overall audit risk of engagements below acceptable limit, the auditor must assess the level of risk pertaining to each component of audit risk. The model is: Audit Risk = Inherent Risk x Control Risk x Detection Risk Inherent Risk is one of the major items or topics that are a part of auditing and here is what I have found. It is considered to be a risk of material misstatement in the financial statements arising due to error or omission as a result of factors other than the failure of controls. Factors that may cause a misstatement due to absence or lapse of controls are considered separately in the assessment of control risk. Inherent risk is also generally considered to be higher where a high degree of judgment and estimation is involved or where transactions of the entity are highly complex. Inherent risk in the audit of a newly formed ...
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...AUDIT RISK MODEL Audit Risk (AR): risk that auditor will opine (render an opinion) with an unqualified opinion when unknown to auditor, FS are materially misstated (ultimate risk) Inherent Risk (IR): risk that errors (or misstatements or deviations) will occur," clientcontrolled Control Risk (CR): risk that client's internal control system will fail to prevent/ detect/correct errors ... clientcontrolled Detection Risk (DRI_ risk that auditor's procedures will fail to detect errors ... auditorcontrolled AR IR * CR * OR Audit risk = inherent risk * control risk * detection risk Audit risk: always set priority at a low level (.0 1, 05, 10) Inherent risk: controlled by client ... function of type of business, degree of liquidity, complexity Control risk: controlled by client ... relates to effectiveness of client's control system in preventing, detecting, and correcting errors. Detection risk: controlled by auditor ... function of nature, timing, and extent of audit procedures applied ... allowable or acceptable Solution Set: (1) Detection risk = audit risk / (inherent risk * control risk) (2) Detection risk low ... the more evidence you have to collect (3) Detection risk high ... the less evidence you have to collect Audit Risk: risk that auditor issues unqualified opinion when statements are materially misstated, audit risk and detection risk exactly related. IR/CR and detection risk...
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...control function that acts as a third line of defense after the business and risk management function. The other control functions are – finance controller, legal and compliance, business continuity, and risk management. The primary responsibility of the control functions within organization is to provide oversight based on the guidance as stated by the company. Internal audit is an independent control function that assesses the risk and control effectiveness of the firm. The scope of the Internal Audit is firm wide and it reports to the audit committee. Annually, leveraging the ongoing risk assessments, it develops the audit plan wherein the business units within the firm are audited. The approach to internal audit is risk based. That is,...
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...BUSINESS RISK AND THE AUDIT PROCESS. Should the risk of litigation, sanctions or an impaired reputation affect the conduct of an audit? by Craig A. Brumfield, Robert K. Elliott and Peter D. Jacobson Business risk is the probability that an auditor will suffer a loss or injury to his professional practice. It differs from audit risk, which is the probability that an auditor will issue an unqualified opinion on materially misstated financial statements. For example, an auditor may be sued (business risk) whether or not the audit and the financial statements comply with professional standards (audit risk). Audit risk can infiuence business risk because an inappropriate opinion can be a significant factor in the events that lead to loss or injury to an auditor's professional practice. Conversely, business risk may, within limits, influence the auditor's assessment of the acceptable level of audit risk. The concept of audit risk is directly related to the third standard of fieldwork, which requires the auditor to gather evidential matter sufficient to support the opinion. It follows from the concept of sufficiency that a minimum level of audit work, or evidence gathering, is required on every audit conducted in accordance with generally accepted auditing standards. Although this is obvious, it must be accepted that the concept of a required minimum level of audit work is basically undefined and the concept of audit risk unmeasurable with current techniques. The auditor uses his...
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...AND TECHNIQUES USED TO ENSURE THE INTERNAL AUDIT PERFORMANCE Marian SFETCU Phd. Student, Faculty of Economics Sciences and Business Administration of „Babeș - Bolyai” University of Cluj Napoca.E-mail: marian_sfetcu@yahoo.com. Tel: 0720 760 220 Abstract: This approach shows a research on the usage of managemental methods on the internal audit activity through qualitative and quantitative indicators of performance assurance. Balanced Scorecard, the management method and tool, referred to the Dashboard, contributes to the internal audit performance through resource planning, setting objectives and scope of the audit, communication and approval, following the recommendations, deferring to the code of ethics and how to achieve the objectives. The listed indicators, are components of the proposed management methods and tools, and they define efficency, effectiveness, economy and quality, all elements of the internal audit performance. Keywords: methods and techniques, audit, corporate governance, internal control system, performance indicators, Balanced Scorecard, Dashboard. JEL: M 42 1. INTRODUCTION The importance of using the management methods and techniques concerning the internal audit, is given by providing a new approach to this problem, which highlights the need to ensure the performance by applying new methods and techniques, based on scientific management. This approach was born from the need to adapt the internal audit to the new demands of the economical, social...
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...Ability to Assess Fraud Risk on Their Ability to Detect the Likelihood of Fraud Nahariah Jaffar* Faculty of Management, Multimedia University Arfah Salleh Graduate School of Management, Universiti Putra Malaysia Takiah Mohd Iskandar Faculty of Economics and Business Management, Universiti Kebangsaan Malaysia Hasnah Haron School of Management, Universiti Sains Malaysia ABSTRACT The Malaysian Approved Standards on Auditing, AI 240 on “Fraud and Error” (MIA, 1997) requires the auditor to assess the risk of fraud and error during the audit of financial statements. Based on the risk assessment, the auditor should design audit procedures to obtain reasonable assurance that misstatements arising from fraud and error that are material to the financial statements taken as a whole are detected. Inability of the external auditor to detect material misstatements, particularly intentional misstatements, may expose the external auditor to litigation. The present study aims to examine the effect of the external auditor’s ability to assess fraud risk on his/her ability to detect the likelihood of fraud. An experimental approach is adopted by sending case materials to audit partners and audit managers attached to auditing firms operating in Malaysia. The result shows that in a high fraud risk scenario, the external auditor’s ability to assess fraud risk has a positive effect on his/her ability to detect the likelihood of fraud, whereas in a low fraud risk scenario not. The findings...
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...Audit Process Letter Laura Sferra ACC/546 November 23, 2015 Allen Foster Mrs. Susan Right Senior Partner Anderson, Olds, and Watershed 1 Shoe Street New York, NY. 90001 Dear Mrs. Right, Mr. Lancaster, President of Apollo Shoes, has expressed his satisfaction with the services that our firm offers and would like to continue with a full audit. Because our client does not want our firm to talk to the predecessor auditor, I recommend accepting a prospective engagement after I perform an investigation by gathering information about our client's reputation and background. Client acceptance and continuance procedures are the foundation of the risk assessment process (SAS No. 8). Upon acceptance of our client, I am confident that we will be able to move forward under the AICPA auditing standards to determine that the financial reporting framework is appropriate. My objective is to plan the audit so that it is conducted efficiently and effectively, in accordance with Generally Accepted Auditing Standards. I will take into consideration the preliminary planning activities such as the client acceptance, ethical position of our audit firm and our understanding of the entity and its environment, including its internal control, to develop an effective and efficient overall audit strategy that will appropriately respond to assessed risks. Our engagement letter, will include the timetable of fieldwork, the scope and duration of...
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