SAS 109 requires auditors to obtain sufficient knowledge of the organization's risk assessment procedures to understand how management identifies, prioritizes and manages financial reporting risk. List five circumstances that can cause risks to arise or change
• Changes in the operating environment that impose new or changed competitive pressures on the firm.
• New personnel who have a different or inadequate understanding of internal control.
• New or reengineered information systems that affect transaction processing.
• Significant and rapid growth that strains existing internal controls.
• The implementation of new technology into the production process or information system that impacts transaction processing.
• The introduction of new product lines or activities with which the organization has little experience.
• Organizational restructuring resulting in the reduction and/or reallocation of personnel such that business operations and transaction processing are affected.
• Entering into foreign markets that may impact operations (risk associated with foreign currency transactions).
• Adoption of a new accounting principle that impacts financial statement preparation.
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