Inherent Risk Essay

Inherent adventure Computerizing risk Non-routine transactions (Beasley 2010, p268) Transactions that atomic number 18 unusual for the guest are more likely than routine transactions to be incorrectly recorded, beca practice session of the client often lacks experience in recording them. Why it is risk Santos use a series of computerizing or IT technology to support their business for join on market competition. IT technology has been used for trade ordering systems amidst customs duty and Santos. Customers can order or purchase goods online.Therefore, non-routine transactions might transcend if customers not familiar with the computerizing system. Whats more, Computerizing system would always make the similar mistake, if the system has not designed properly. Thus, It might also contain around misstatement of transactions or increase opportunities that the transaction record incorrectly, such as , some of sales transactions might record in opposite income due to computeriz ing system design mistake. Misstatement of sales account would lead to cipher wrong actual profit at the end of financial year, thereof it contain risks to estimate wrong also affect theEvidence take away sure that the computerizing system had been designed properly review the computerizing system to observe whether there are some mistakes. Investigate sales account and other income account, identify whether every transaction has been recorded correctly. Management risk Factors connect to fraudulent financial reporting and misappropriation of assets (ASA 240 incentives/pressures) Adverse relationship between the entity and employees with access to cash or other assets susceptible to the theft whitethorn motivate those employees to misappropriate those assets, for xample promotions, compensation, or other rewards inconsistent with expectations. Management and weaknesses in internal control may be present when misstatement due to every fraudulent financial reporting or misappropr iation. Why it is risk (ASA240 ) plus misstatement or been record incorrectly due to motivation that theft could return from it. Weak management of internal environment would lead to fraud or misstatement happened by personal motivation.