| Category | Name | I.D | Potential Causes | Response For Each Cause | |
| Mitigation | Contingency | ||||
| Control risk | Clients control system are not able to detect material misstatements | 1.1 | Weakness of internal control | Understanding and assessing client’s internal control through testing. | Having a proper risk assessment at the planning stage. |
| Detection risk | Audit procedures are not able to detect misstatements | 1.2 | Improper audit planning and wrong audit | Use of the right audit and a strong strategic audit plan | Having a competent audit team. |
| Inherent risk | Clients financial systems are susceptible to material misstatements | 1.3 | Complexity in the nature of business and the high involvement of human judgment | Set up a proper audit plan, audit approach and audit strategy | Involvement of members with deep understanding business as well as accounting transactions. |
| Success measure | Risks | Major risk | Contingency plan | Category |
| Effectiveness of audit in covering key areas |
Communication risk Environmental risk Data evaluation risks |
Wrong information from internal or external sources have negative influence in all the sectors of a business | Determine the risks of information that is inaccurate, misleading, incomplete, or confusing. | mitigation |
| Feedback of audit findings during audit |
Ambiguity risks Escalations risks Approval risks |
Bias in the feedback from the audit | Hiring competent and reputable audit firms | Avoidance |
| Duration and timeliness of audit |
Wrong feedback Poor quality audits |
Short audit timeframes leads to rushed audits hence incompetent outcomes | Allow an appropriate and optimal time for the audit | Avoidance |
| Value of audit recommendations |
Wrong audit recommendations Poor audit recommendations |
Audit recommendations can be of higher cost than what the business can take in terms of financial or labor resolutions | Specify the perimeters of the audit recommendations | Avoidance |
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Relative importance of priorities in auditing includes; protecting assets and reduce the possibility of fraud , improving efficiency in operations, increasing financial reliability and integrity , ensuring compliance with laws and statutory regulations and b uilding the reputation of the business. Operational risk review gives more credible and useful information unlike compliance and financial risk reviews as it encompasses the business entirely, financial and compliance sectors inclusive.
