RSM427H1 Chapter Notes - Chapter 2: Critical System, Audit Risk, Antivirus Software
Document Summary
There are risks and costs to a program of action, but they are far less than the long-range risks and costs of comfortable inaction. jfk. Computers are fast but mistakes can multiply fast. The reduction in the paper (audit) trail through the increasing use of it makes it harder to detect mistakes/irregularities. Inherent risk: the risk of errors/irregularities because of the nature of the business, organization and system: to avoid/reduce it, the organization would need to engage in a less ambitious strategy, to mitigate it, ic are needed. Control risk: the risk of ic not preventing/detecting significant errors: making ic foolproof would be prohibitively expensive. Detection risk: the risk of audit procedures failing to detect material errors. Audit risk: the risk of providing favourable audit assurance on a system, which has a major flaw. o. Auditor is concerned with all three; management is only concerned about the first two. Residual risk (rmm): the risk remaining even after implementing ic. o.