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Auditing and Assurance Service - Essay Example

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This paper tells that several risk factors should be taken into consideration in auditing the business risks of David Jones. According to Ali (2007), auditors usually examine business with the primary goal of identifying the operational and the financial risks that business is faced with…
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Auditing and Assurance Service
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Download file to see previous pages The fact that David Jones sells its products across various countries means that it can apply price discrimination effectively. Price discrimination is possible in the company because the markets in various locations are independent. Britton and Jorissen (2007) assert that price discrimination occurs when the same products are sold at different prices in various markets. For instance, an iPhone can be costing $2000 in the USA yet the same exact iPhone costs $1800 in Australia. However, the concept of price discrimination presents a potential risk of loss of sales. This occurs in the sense that customers are knowledgeable and they might identify this difference in prices and seek alternative means such as purchasing the products online.
David Jones operates in a retail industry, which has its own regulations and practices. Adhering to all the regulations can sometimes be a daunting task and as a result, the company may result to ignore some regulations (Higgins, 2004). This scenario presents the possibility of compliance risk in which the company can be closed down by relevant authorities for failure to comply with set standards.
David Jones operates in a retail industry, which is very dynamic. Changes in tastes and preferences for various products for the company can plunge the company into strategic risk, which might result in loss of sales. The strategic risk in David Jones also occurs when other rival firms merge and increase their business performance, which may edge David Jones out of the market.
Financial risk is yet another potential business risk facing David Jones. The company has two main sources of finance, which is equity and debt capital. Monye (2006) claims that if the company decides to finance its operations from debts the going concern is threatened because it might not be in a position to honor its financial obligations. ...Download file to see next pagesRead More
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