Auditing Market and Businesses Risks

Question: Discuss about the Auditing for Market and Businesses Risks. Answer: Introduction: It is known that there is extreme competition in the market and businesses actually are expose to several kinds of risks. An inherent risk implies that kind of risk that is posed by an omission or error in the financial statements because of a factor other than a control failure. It prevails in the system because of several statutory regulations or nature of reporting. Moreover, an inherent risk fails to be domesticated by the measures of internal control or by audit procedures by an auditor. Therefore, it must be noted that whenever a business diversifies its operations, it gets exposed to such inherent risks. The process of risk evaluation in business accommodates various kinds of factors such as environmental factors, external factors etc (Heeler, 2009). It also contains immoral problems that associate to fraud or theft, inappropriate transactions that requires high management estimates and other false statements. However, as and when the business is in line of progress, several kinds of risks that are already depicted by the management authorities are discovered at a prior level. This can be done with the assistance of factors like control and measurement. The business evaluation can be facilitated in two different but significant ways like the macro as well as micro factors that must be taken into account from their entry point till the payment of taxes, distribution of profits after realization of revenues etc. Hence, during the assessment of risks prevalent in business, the measures of internal control are being taken into consideration at every stage and this leads to discovering of the poor or weak zones (Kruger, 2015). But there is a certain belief that such discovering of misstatements or fraud or theft cannot be identified until it transforms to a huge level. It has also been observed that the accounts department often disregards the petty mistakes that cannot pose a serious threat to the management as a whole, thereby leading towards exposure to inherent risks (Gilbert et. al, 2005). In relation to this, it must be noted that the presence of external and internal audits are very crucial in order to identify the weak areas with extreme flexibility and effectiveness. Furthermore, if such are not identified, then a combination of them can give rise to a huge and bigger mistake that can hamper the managements operations. In the case of OneTel, it can be seen that their management committed gross mistakes and even the accounts department did not carry out their duties effectively. This is cited as one of the major issue. Several factors like inefficient due diligence, poor management, inaccurate terms, and conditions, absence of auditors and executives independence etc led to the disintegration of OneTel. Furthermore, the business failed to introduce effective and necessary steps during the evaluation of risk procedures (Monem, 2009). The strong mechanics of risk control were absent, therefore it become difficult to operate the business. The Managing Director as well as the Founder of OneTel made such claims that were completely false and related to fraud. This clearly indicates that the business of OneTel was carried out so as to make huge profits and surplus but through adoption of illegitimate ways. The risks prevalent in the business were not assessed in a proper manner and that made it complex and impossible to trace the risks that have inherent characteristics (Hoffelder, 2012). Therefore, it must be noted that if proper measures and strategies would have been effectively applied, then window dressing of the company could be easily done. However, such problems cannot be identified until and unless it takes the form of a huge or big mistake that can affect the company as a whole. There were a host of factors that affected the smooth operation so the company. Inherent risk is always present in the business and can be tame with strong measures (Monem, 2009). Hence, if all these obstacles assembled, one can understand why OneTel became inoperative and finally crumbled. References Heeler, D. (2009). Audit Principles, Risk Assessment Effective Reporting. Pearson Press Hoffelder, K. (2012). New Audit Standard Encourages More Talking. Harvard Press. Gilbert, W. Joseph J Terry J. E. (2005). The Use of Control Self-Assessment by Independent Auditors, The CPA Journal, 3, 66-92 Monem, R. (2009). The Life and Death of OneTel. Griffith University. Kruger, P. (2015). Corporate goodness and shareholder wealth. Journal of Financial economics, 304-329.