Page 104 - AAA Integrated Workbook STUDENT S18-J19

Chapter 73 4

Responses to risk assessment

The main purpose of performing risk assessment is to guide the auditor in the design
and performance of further audit procedures to obtain sufficient appropriate audit
evidence.

The only way the auditor can reduce audit risk is by manipulating their detection risk.

Detection risk can be reduced by:

 Emphasising the need for professional scepticism.

 Assigning more experienced staff to complex or risky areas of the engagement.

 Providing more supervision.

 Incorporating additional elements of unpredictability in the selection of further
audit procedures.

 Making changes to the nature, timing or extent of audit procedures, e.g.

– Placing less reliance on the results of systems and controls testing.

– Performing more substantive procedures.

– Consulting external experts on technically complex or contentious matters.

– Changing the timing and frequency of review procedures.

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