What is Risk assessment procedures?
In short
Risk assessment procedures are the procedures the auditor performs to understand the entity, its environment, its financial reporting framework and its system of internal control, in order to identify and assess the risks of material misstatement.
Key takeaways
- They include inquiries of management and others, analytical procedures, and observation and inspection.
- On their own they don't provide sufficient appropriate evidence for the opinion.
- The engagement team discussion about where the statements could be misstated is part of risk assessment.
Where it's tested
AUD: Assessing Risk of Material Misstatement — study notes, a five-minute revision sheet and practice questions.
Practise: 3 questions
Question 1 of 3 · 0 answered
A client operates with weak segregation of duties over its cash disbursement process. All else equal, how should the auditor respond?