Audit Term Paper

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MZUMBE UNIVERSITY

SCHOOL OF BUSINESS DEPARTMENT OF ACCOUNTING AND FINANCE

PROGRAMME: MSC. ACCOUNTING AND FINANCE COURSE: AUDITING AND ASSURANCE SERVICES CODE: ACC5221 NATURE: TERM PAPER STUDENT NAME: HAMAD OTHMAN RUBEA REG NO: MSC/AF/MOR/010/T.12 LECTURER: MR. KASHESHI TASK: Discuss the business risk that may face any organization and the Auditors concern about these risks.

DATE OF SUBMISSION AND PRESENTATION: 17th DEC 2012

TABLE OF CONTENTS Pages 1.0 NTRODUCTION ......................................................................................................................1 2.0 BUSINESS RISK ......................................................................................................................1 2.1 MEANING AND DEFINITION OF BUSINESS RISK: ......................................................... 1 2.1.1 INTERNAL FACTORS/ RISK ..................................................................................... 1 A. B. C. Human factors............................................................................................................... 2 Physical factors ............................................................................................................. 3 Technological factors ................................................................................................... 3

2.1.2 EXTERNAL RISKS: ..................................................................................................... 3 A. B. C. Economic factors .......................................................................................................... 4 Natural factors: ............................................................................................................. 5 Political factors: ............................................................................................................ 5

3.0 AUDITORS CONCERN ABOUT BISINESS RISK ................................................................6 3.1 REASONS FOR USING BUSINESS RISKS AUDIT APPROACH: ..................................... 7 2.2 UNDERSTANDING THE BUSINESS RISK APPROACH: .................................................. 7 4.0 MANAGING BUSINESS RISK ...............................................................................................8 5.0 CONCLUSION..........................................................................................................................8 6.0 REFFERENCES ........................................................................................................................9

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1.0 NTRODUCTION

Every business organization contains various risk elements while doing the business no matter its size, products or geographic location. A complete risk can result in financial loses, loss of reputation, lost of opportunity in the market etc.

Running a business can be dangerous

occupation with many different types of risk some of

these potential hazards can destroy a business, while others can cause serious damage that can be costly and time consuming to repair.

To understanding the types of risks your business faces is important because it helps you to determine how to protect your business investment against them. This term paper is going to discuss in detail, the business risks faces an organization and auditors concern about those risks.

2.0 BUSINESS RISK 2.1 MEANING AND DEFINITION OF BUSINESS RISK: A business risk is a circumstance or factors that may have a negative impact on the operation or profitability of a given company1. A business risk can also be defined as the threat that an event or action will adversely affect a business ability to achieve its ongoing objectives2. The universe of uncertainty that each company faces is comprised of endogenous and exogenous dimensions.

2.1.1 INTERNAL FACTORS/ RISK These are those risks which arise from endogenous variables taking place within the business organization. An internal risk arises during the...
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