Page 18 - Auditing Standards
P. 18
As of December 15, 2017
AS 1101: Audit Risk
Effective Date: For audits of fiscal years beginning on or after Dec. 15, 2010
Final Rule: PCAOB Release No. 2010-004
Summary Table of Contents
.01 Introduction
.02 Objective
.03 Audit Risk
Introduction
.01 This standard discusses the auditor's consideration of audit risk in an audit of financial statements as
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part of an integrated audit or an audit of financial statements only.
Objective
.02 The objective of the auditor is to conduct the audit of financial statements in a manner that reduces
audit risk to an appropriately low level.
Audit Risk
.03 To form an appropriate basis for expressing an opinion on the financial statements, the auditor must
plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of
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material misstatement due to error or fraud. Reasonable assurance is obtained by reducing audit risk to an
appropriately low level through applying due professional care, including obtaining sufficient appropriate audit
evidence.
.04 In an audit of financial statements, audit risk is the risk that the auditor expresses an inappropriate
audit opinion when the financial statements are materially misstated, i.e., the financial statements are not
presented fairly in conformity with the applicable financial reporting framework. Audit risk is a function of the
risk of material misstatement and detection risk.
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