Which of the following should be the focus of the effect section of the preliminary observations document?

The correct answer is A. Residual risk. The focus of the effect section of the preliminary observations document should be on residual risk. Residual risk is the remaining risk after management has taken action to mitigate the inherent risk with controls and other risk responses. Documenting the effect in terms of…

Communicating Results

Question

Options

AResidual risk
BInherent risk
CCompensating controls
DControl activities

How the community answered

(65 responses)

A
91% (59)
B
2% (1)
C
2% (1)
D
6% (4)

Explanation

The focus of the effect section of the preliminary observations document should be on residual risk. Residual risk is the remaining risk after management has taken action to mitigate the inherent risk with controls and other risk responses. Documenting the effect in terms of residual risk helps in understanding the potential impact of the observed issues on the organization if not

Topics

#audit observations#effect section#residual risk#audit findings

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