Computing systems in some companies have not kept up with the complexity and volume of transactions. Tax shelter-advising businesses tend to be risky because of the nature of the investments and because significant funds are often entrusted to the advisers without any review or regulation. There may be questions about the background of individuals running the businesses. Additionally, such businesses create many opportunities for fraud because they involve the handling of large quantities of cash. Construction Contractors Construction is risky because one badly bid job can cause a company to face bankruptcy.
Some contractors have difficulties dealing with organised labour.
The woes of these industries have been adequately chronicled in the financial press. It is difficult to audit the value and collectibility of loans as well as the collateral associated with the loans. More recently, failures to provide oversight on investments in financial derivatives have led to the failure os some of the largest, and most established international financial institutions. Because of potential abuses in this industry, an auditor must be sure of the type of client activities before accepting an engagement. This industry has been characterised by rapid growth and competitive activities to acquire new contracts or disposal areas.