AAA – L3 – SA – Q3.5 – Internal Business Risk

Identifying internal business risk.

Question

Which one of the following is an internal business risk?

A A new competitor in the market

B Insolvency of a customer

C Poor working capital control

D Suppliers demanding tighter credit terms

Answer

Explanation:
Poor control of working capital is a risk arising from within the company, making it an internal business risk. A new competitor (A), insolvency of a customer (B), and tighter credit terms from suppliers (D) are external business risks, as they originate outside the company. Thus, C is the correct answer.

Tags: Business Risk, ICAG, Internal Risk, Working Capital
Level: Level 3

Topic: The audit approach

Uploader: Salamat Hamid