An outsourced accounting application has the most inherent risk and should be prioritized during audit planning because it involves external parties, sensitive data, and complex transactions that are susceptible to material misstatement, error, or fraud12. An outsourced accounting application also requires more oversight and monitoring from the internal audit department to ensure compliance with the service level agreement and the organization’s policies and standards3.

References

1: Inherent Risk: Definition, Examples, and 3 Types of Audit Risks 2: 3 Types of Audit Risk - Inherent, Control and Detection - Accountinguide 3: IS Audit Basics: The Core of IT Auditing