You work as a Network Auditor for Net Perfect Inc.
The company has a Windows-based network.
While auditing the company's network, you are facing problems in searching the faults and other entities that belong to it.
Which of the following risks may occur due to the existence of these problems?
Click on the arrows to vote for the correct answerA. B. C. D.
procedure or using procedures inconsistent with the audit objectives (detection faults)
Answer: A is incorrect.
Residual risk is the risk or danger of an action or an.
Detection risks are the risks that an auditor will not be able to find what they are looking to detect.
Hence, it becomes tedious to report negative results when material conditions (faults) actually exist.
Detection risk includes two types of risk: Sampling risk: This risk occurs when an auditor falsely accepts or erroneously rejects an audit sample.
Nonsampling risk: This risk occurs when an auditor fails to detect a condition because of not applying the appropriate event, a method or a (technical) process that, although being abreast with science, still conceives these dangers, even if all theoretically possible safety measures would be applied (scientifically conceivable measures)
The formula to calculate residual risk is (inherent risk) x (control risk) where inherent risk is (threats auditing, is the risk that the account or section being audited is materially misstated without considering internal controls due to error or fraud.
The assessment of incorrect.
A secondary risk is a risk that arises as a straight consequence of implementing a risk response.
The secondary risk is an outcome of dealing with the original risk.
Secondary risks are not as rigorous or important as primary risks, but can turn out to be so if not estimated and planned properly.
The situation described in the question is related to difficulties in searching for faults and entities within the Windows-based network. Based on this information, the risk that may occur due to the existence of these problems is the detection risk.
Detection risk refers to the risk that an auditor or an organization may not detect material misstatements in the financial statements or systems. In this context, the difficulty in searching for faults and entities in the network may lead to the inability of the auditor to detect any existing vulnerabilities or weaknesses that may be exploited by an attacker.
It is important to note that detection risk is one of the components of audit risk. Audit risk is the risk that an auditor expresses an inappropriate opinion on the financial statements or systems due to a failure to detect material misstatements. The audit risk consists of inherent risk, control risk, and detection risk.
Inherent risk is the risk of a material misstatement occurring in the financial statements or systems due to the nature of the business or the environment. Control risk is the risk that a material misstatement will not be prevented or detected on a timely basis by the entity's internal controls.
Residual risk, on the other hand, refers to the risk that remains after management has implemented controls to mitigate inherent and control risks. Secondary risk is not a common term used in the context of audit risk.
In conclusion, the risk that may occur due to the difficulty in searching for faults and entities in the Windows-based network is the detection risk. This may lead to the inability of the auditor to detect any existing vulnerabilities or weaknesses that may be exploited by an attacker.