Business Risks and Procurement Audit

Procurement and Audit notes revision

According to ISA 315 Business risks ‘result from significant conditions, events, circumstances or actions that could adversely affect the entity’s ability to achieve its objectives and execute its strategies, or through the setting of inappropriate objectives and strategies’
It is usually split into
• Financial risk,
• Operational risk
• Compliance risk.
The auditor should obtain an understanding of the entity’s process for identifying business risks relating to financial reporting objectives and deciding about actions to address those risks, and the results thereof.
Review Questions
1. Discuss four types of liability the procurement auditor is exposed to
2. Explain the circumstance under which a procurement auditor may be liable for damages for materials misstatements in published procurement information on which he has expressed an audit opinion
3. List three categories of parties who may institute successful legal claims against a procurement auditor emphasizing the basis a court of law would use to assess the value of damages
4. Identify five actions a procurement auditor or procurement audit firm take to minimize liability arising from audit risk
5. Explain advantages and disadvantages of using the risk-based audit approach when auditing the procurement records of a procuring entity.
6. write summary notes on the following concepts as in procurement audit:
i. Audit risk
ii. Inherent risk
iii. Control risk
iv. Detection risk
v. Non-sampling risk

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