BUSINESS RISKS

Based on the findings from the Annual report and other sources Audinate group had its own ups and downs during the last financial year including various business risks. Some of the three most important business risk that affected the company are as follows:

1. Technological advancements

Due to the ongoing development of its technology, Audinate Group Limited is exposed to several serious business risks. These dangers cover a range of topics:

1. Unlicensed Use of Third-Party Intellectual Property (IP): Audinate runs the risk of unintentionally incorporating unlicensed third-party IP into its goods. Such use can subject the business to obligations and legal action, which might result in fines and reputational harm (Audinate, 2022).
2. Aging Technology Platform: Audinate's technology platform has difficulties due to its age and design (Audinate, 2022). When hardware components reach the end of their useful lives, finding replacements can be difficult. Additionally, the process of developing software on a sophisticated and intricate technology platform can get harder over time (Beattie et al., 2020)

1. Cyber Security

Audinate Group Limited is aware of the changing hazards related to data security. The firm is aware that cyber risks constitute a serious threat to its operations, reputation, and commercial endeavors. With the help of a Cyber Security Steering Committee, a Security Operations function, and a cross-functional Security Operations Working Group, these risks are actively managed. The Board Audit and Risk Management Committee also supervises Audinate's cybersecurity strategy (Audinate, 2022). If not managed properly it can result in the following damages:

1. Reputation and Customer Trust: Cybersecurity breaches may cause a loss of customer confidence and reputational harm to the business. Customer attrition and damage to the reputation of the brand may result from the compromise of customer data (Liu et al., 2022).
2. Operational Disruption: Successful cyberattacks have the potential to disrupt business operations, leading to downtime, lost productivity, and additional costs to fix the problem (Bojanc & Jerman-Blai, 2008). This may affect how well the business can service its clients.

1. Supply Chain Management

Throughout FY22, Audinate Group Limited experienced severe supply chain problems and an electronic component scarcity. This posed a significant commercial risk since it could affect production procedures and product availability. Addressing the severe chip shortage required the internal team's flexibility, improved ties with important chip suppliers, and redundancy in contract manufacturing (Audinate, 2022). To counteract shortages related to the Brooklyn-II product, Audinate additionally built inventory of essential raw materials, especially for the new Brooklyn-III design. However, the company expects supply chain issues to continue in FY23, which will be characterized by extended lead times for electronic components and persistently high spot market prices(Audinate, 2022). Both Audinate and its manufacturing clients are anticipated to be impacted by these difficulties. The impact includes:

1. Launch delays: Issues with the supply chain might result in brief delays for new product launches (Chopra & S.Sodhi, 2004). This could harm Audinate's ability to compete in the market and fulfill client demand.
2. Delayed Sales Orders: Audinate sales orders may be postponed or canceled because of supply chain disruptions experienced by manufacturing clients. The company's financial performance may be affected, which could lead to a loss of revenue(Chopra & S.Sodhi, 2004).
3. Global Economic Conditions: Worsening global economic conditions including COVID_19 can make supply chain disruptions more severe (Geng et al., 2017). Reduced demand for Audinate's products can hinder supply chain management during economic downturns.

Based on this report write atleast one inherent risk that is related to Audinate Group ltd additional to those identified by the incumbent auditor and how these risks may be mitigated via audit techniques

1. How the risk relates to a Business Risk identified in the previous section

2. Why the risk is significant. Your response should provide a narrative explanation as well as refer to account balances, relevant notes to the account and applicable Accounting Standards; and

3. How the risk could be addressed in the audit. Your response should include reference to relevant preventative and/or detective internal controls, specific audit tests that could be undertaken, the nature of these test (i.e. tests of control, analytical review and tests of detail) and applicable Auditing Standards.