Risk assessment challenges for auditors
Risk assessment is critical to the performance of all financial statement audits. This Audit and Assurance Faculty guide explores some of the aspects of risk assessment and the auditor’s response that continue to present challenges to auditors.
The idea of a “risk-based” approach to auditing is not a difficult concept: it refers to the focus of the audit process on those areas that are most at risk of material misstatement. Nevertheless, both auditors and regulators report problems in determining what constitutes a “significant” risk, a “material” risk and a “high-risk area”.
The last major revision to the risk ISAs was in 2003 and triggered significant adjustments to many firms’ methodologies. Firms of all sizes initially struggled to apply the new requirements, and there was general agreement that while there was nothing inherently difficult about the new ISAs, they were unwieldy, not an easy read, and were particularly hard to apply to smaller, less complex audits.
Continue reading
This content is not freely available. To access 'Risk assessment challenges for auditors' you need to be one of the following:
-
ACA student
-
This content is available to ACA students. If you want to start the ACA qualification there are several routes you can take
-
Audit and Assurance Faculty
-
Stay ahead of the curve with our expert guidance, trusted technical resources and practical insights.
-
Business and Finance Professional
-
An internationally recognised designation and professional status from the ICAEW.
-
ICAEW member
-
Gain access to world-leading information resources, guidance and local networks. 98% of the best global brands rely on ICAEW chartered accountants.