In: Accounting
Which one is of greater concern to the auditor: risk affecting audit effectiveness or risk affecting audit efficiency? Explain.
Risk affecting audit efficiency is of a greater concern to the auditor
Effectiveness is how well a process accomplishes its objective. Efficiency is how well a process turns inputs into outputs—more efficient processes have less waste than inefficient processes. A process can be defined as a series of purposeful steps or actions that, when completed, produce a desired result.
In both the cases we can see that both effeciency and effectiveness speak about the output. But it is definately more important that the process turns input into output according to the standards set, hence audit efficiency is of a greater concern for the auditor. Efficiency speaks about the effectiveness of each process. Each process should effectively convert their input into output. However, effectiveness speaks about the final output. If the various processes are efficiently followed then the process will automatically become effective.
If the process is giving the desired output without following the standard process techniques then there are some gaps in the production process. The identification of these gaps is crucial for identifying the risk of the business. If the auditors can identify the risk in each step of the entire production process, then the overall risk can be identified. Thus, risk associated with audit efficiency is of greater importance for the auditor