Question

There are various stages in an audit engagement where certain activities take place — for example, the assessment of engagement risk. Reputational risk is considered to be part of engagement risk. During which stage of the engagement is reputational risk assessment most likely to occur?

a) Planning and risk assessment stage

b) Acceptance and continuance stage

c) Execution stage

d) Completion and reporting stage

Answer 1

Option A is correct answer.

Reputational risk arise due adverse effect of publicity ,public relations or negative perception about the company.That may become the cause of loss of repution in market.It might be cause of increase in operating cost,loss in revenue and loss of shareholders also. After the risk assessment following process is followed

1. Step 1: Identify hazards, i.e. anything that may cause harm.
2. Step 2: Decide who may be harmed, and how.
3. Step 3: Assess the risks and take action.
4. Step 4: Make a record of the findings.
5. Step 5: Review the risk assessment.