Question

Which of the following are risks when a client installs a new IT system? Select all that apply.

1) The auditors may fail to give an unmodified opinion.
2) The business may not achieve its profitability targets.
3) The system may not be appropriate for the client and its reporting requirements.
4) The client staff may not be adequately trained to use the new system effectively.

Answer 1

The risks of installing a new IT system include the system not matching the client's needs, inadequate staff training, and the risk of not meeting profitability targets. Broader concerns also encompass the digital divide, security risks, and privacy loss.

Step-by-step explanation:

When a client installs a new IT system, there are several risks to consider. These include:

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• The system may not be appropriate for the client and its reporting requirements, which could lead to inefficiencies and regulatory issues.
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• The client staff may not be adequately trained to use the new system effectively, resulting in a lack of productivity and potential errors.
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• The business may not achieve its profitability targets due to the costs and disruptions associated with implementing a new IT system.

While not directly mentioned, the risk of auditors failing to give an unmodified opinion can be tied to these issues if the new IT system affects financial reporting and controls. Additionally, there are broader risks associated with technology upgrades, such as the digital divide, security risks, loss of privacy, and reliance on technology which could lead to severe consequences during events like disasters or systematic attacks on technological infrastructure.