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Chapter 93 4

Responses to risk assessment

5.1 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 manipulated in the following ways:

 Assign more experienced staff to risk areas.

 Place less reliance on controls.

 Increase the emphasis on substantive tests of detail.

 Change the nature, timing and extent of procedures.

 Consult with experts.

 Increase supervision levels.

 Increase the element of unpredictability in sample selection.

 Increase the quality control procedures performed e.g. frequency of reviews.

 Emphasise the need for professional scepticism.

Illustrations and further practice

Now try TYU question 1 from Chapter 9

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