Question

Why must we as accountants understand risk and conduct risk assessments? Do you think an audit could be performed without conducting a risk assessment? Discuss some of the pros and cons of having a risk assessment to an organization.

Answer 1

We as an account must understand the risk because an accountant have responsibility to maintain accounts and they have to profit of organisation. An accountant have full information about the organistion they have knoweldge about the company investments every years and get the return from that investment. An account have also knoweldge about the debt and creditors they can easly estimate te payment received from debtors and bad debt of the year. An accountant have must knoweldge account the risk because all information maintain by his and all decisions are taken on the basis of his information.

Risk assessment is a term used to describe the overall process or method where you: Identify hazards and riskfactors that have the potential to cause harm. An account an conduct risk assessment because while trainig he have got very knoweldge how to get risk assessment and most of risks are find out from the account books beacuse account books or sofware have the all detail of the company.

I think an audit could be performed without conducting a risk assessment but i could not give the statisfactory readily to the company beacuse without the this auditor would not able to perform the auditing function in eficiency. If audit conduct with risk assessment it give better result because it help the auditor to identify risk easily so ris assessment is necessary for auditing but not compulsory

pros of having risk assessment to an organization

a. Benefits of risk identification:

b. Treatment of risks:

c. Minimization of risks:

d. Successful business strategies:

e Harvesting knowledge:

f. Protecting resources:

cons of having risk assessment to an organization

a. Complex calculations:

b. Unmanaged losses:

c. Ambiguity:

d. Difficulty in implementing:

e. Potential threats: