Audit Risk, from the Perspective of the Clarified Audit Standards

Author:Martyn JONES, ACCA

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Keywords:audit risk, material misstatement, risk assessment procedures

Abstract:
This article outlines and explains the concept of audit risk, making reference to the key auditing standards which give guidance to auditors about risk assessment.\r\nIdentifying and assessing audit risk is a key part of the audit process, and ISA 315, Identifying and Assessing the Risks of Material Misstatement through Understanding the Entity and Its Environment, gives extensive guidance to auditors about audit risk assessment.\r\nThe concept of audit risk is of key importance to the audit process and the professional auditors are required to have a good understanding of what audit risk is, and why it is so important. It is important for the auditor to understand that audit risk is a very practical topic that has to be taken into consideration in all the audits.\r\nThe auditors must also be prepared to apply their understanding of audit risk to questions and come up with appropriate risk assessment procedures.

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