Significant Business Risk Factors That the Auditor Needs to Consider for the Metcash Group Engagement - Coursework Example

The paper "Significant Business Risk Factors That the Auditor Needs to Consider for the Metcash Group Engagement" is a perfect example of finance and accounting coursework. Strategic risk is the risk that an organization, using stipulated strategies, won’t be able to achieve set objectives. There is a risk that Metcash won’t be in a position to achieve its set objectives by the use of strategies already formulated because of changing consumer preferences. Due to changes in economic trends, formulation of strategies to achieve this risky.

Market risks

The business environment is faced with a lot of dynamism and every organization is bound to set priorities right in order to get a sizeable market share. Market risk refers to the risk that Metcash won’t be in a position to maintain its market share in the long run due to increased competition and other external market factors affecting the firm like interest rates and inflation. This according to audit, threatens the going concern of the entity and can make the auditor issue a qualified report.

Operational risk

Operations refer to the activities that are undertaken by an organization to keep it running. In order for the organization to be successful, operations must be tailored towards the attainment of objectives. Metcash id undergoing a lot of transformations and there is a risk that the operational move won’t be able to deliver expected targeted results. According to the audit, this affects performance and expected achievement of objectives. This can lead an auditor to qualify the audit report

Compliance risk

Each and every organization is bound to comply by set rules and regulations. Compliance risk is the risk that an organization fails to comply with statutory rules and regulations set by relevant statutory bodies. Metcash is bound to operate under statutory regulations like OH&S. Failure to comply with set regulations will affect shareholders returns and can lead an auditor to qualify his report

Financial risk

Each and every organization is required to prepare financial statements. Financial statements show the profitability and financial position of an entity. Financial risk is the risk that financial statements fail to reflect the true position of an entity. There is a risk the financial statements of Metcash may fail to reflect the true state of its affairs. However, Metcash maintains proper working capital to maintain its liquidity level. Failure to maintain adequate working capital affects the liquidity level and can make the auditors issue a qualified report