Relationship between Business Risk & Audit

[Name of Student]

[Name of Institute]

Relationship between Business Risk & Audit

Introduction

In a competitive environment, dynamic and challenging, the audit who knows the strategies and the risks of the business plays a key role in the sustainability of the organization.

We live in a globalized economy with a high degree of competitiveness among organizations. This dynamic market promotes a daily challenge for the survival of businesses, forcing them to establish internal processes more efficient and effective in order to save them from the internal and external risk (Abdel-Khalik 1998).

The major accounting firms perform audits using the business risk audit approach through (called BRA) approach. This approach is rooted more recently in compliance with the international auditing standards. In this context, the portfolio of products and services of the organization should be directed to meet the needs of customers, in order to enable the organization and to accomplish its mission and solidify its market position so that companies need to strengthen their position against any business risk (Chan & Lin, 2003).

Discussion

Risk is the chance that an event takes place, multiplied by the result of that event and the probability that a particular scenario in which the above-mentioned takes place chance occurs (this is in contrast to the concept of uncertainty in which the probabilities are not known). This result can be positive or negative. Usually, however, the word is in the negative sense. The risk is also the exposure multiplied by the consequence and probability. The latter are mainly long-term processes; the first definition is often sudden events. At risk factor refers to the damage that an employee can inflict when not carefully fulfilling its task (Khalifa & Humphery, 2007).

Risk = Exposure x Chance with exposure x Consequence

This only applies literally as the result of a number or amount is to express, and the formula is particularly useful when a certain probability of a certain injury as serious as for example a double chance of half damage. This applies to much minor damage with the same victim, but not necessarily limited to large, or several injured (Johnstone, 2000).

Information systems enable the organization to innovate, mediate, control and manage processes, products and services, continuously in order to seek a position in front of the competition (Abdel-Khalik 1998). Therefore, these systems must be able to generate information intact, reliable and timely to assist the decision making process of senior management of the company in the management and monitoring of their portfolio of products and services, focusing on achievement of strategic objectives.

In recent years there has been a significant increase in the number of companies in the country. In 2011, the number of new entrepreneurs has increased 101% over 2009. Some say that the U.S is one of the most enterprising people in the world (Chan & Lin, 2003).

Preserve Business Continuity through Business Risk Audit

Any type of business is subject to uncertainties and failures due to flaws in the design, weaknesses in internal controls, fraud and external influences such as regulatory and legal ...