Assessing inherent and other specific business risks - Week 5

Question 1

Describe pervasive risks, which can be found at the financial report level.

Answer 1

Pervasive risks can potentially affect many areas of the financial report. (e.g. going concern).

Question 2

Describe specific risks, which can be found at the assertion level.

Answer 2

Specific risks generally affect a number of limited specific balances (e.g. the completeness of accounts payable).

Question 3

Describe the relationship between inherent risks and I.T. (information technology)

Answer 3

Risks associated with I.T. tend to be usually pervasive. Issues in I.T. like:

• high dependence on I.T.
• reliance on external I.T.
• complexity of I.T.
• significant changes in I.T.

ALL can affect many assertions.