Audit Risk

Identify 5 aspects of Flash Technologies that reduce its operational and/or audit risk

Operational risk is a series of risks incurred by a company’s internal activities during the operating period. It arises from people, system, internal process and external event. Flash Technologies Inc. has the following highlights in order to maintain its operating risk at an acceptable low level:

1. Experienced management

As Flash Technologies Inc. ’s CEO, Mr. Schwimez is an experienced management and also familiar with Flash since he had at least ten years experience at Flash. His many years of executive experience in Flash Technologies contributed to risk reduction caused by inadequate knowledge of the company.

2. Excellent Quality Control Management

Flash Technologies Inc. has a “zero-defect” policy implemented in April 2010(pg. 29) in order to ensure that there is no defective products are shipped to customers. During the plant tour, the auditor also noticed the manufacturing process is rigorous enough, and no fault products were made; in addition, Flash Technologies hired additional quality control checks throughout the whole manufacturing process. Due to its effort on quality management, Flash Technologies got ISO 9001 certificate in 2010 and became a certified manufacturer. Therefore, we can assess control risk as a low level. Audit risk can be reduced since the control risk is low.

3. Efficiency

Flash Technologies also places a high priory on “manufacturing efficiency”. Comparing manual product line, automated product line is much more efficient, and less fault incurred due to human error. Manufacturing automation also decreases cost and increases output and helps the company save a lot. Today, manufacturing automation technology has become the core technology and basic technology. Upgrading regularly helps the company maintain a high output and adapts itself to market’s needs to reduce operational risk.

4. Manufacturing Flexibility

Since...