Page 59 - AA Integrated Workbook STUDENT 2018-19

Risk

Risk assessment

3.1 Purpose of risk assessment

 Identify areas of the financial statements where misstatements are likely to
occur early in the audit.

 Plan procedures that address the significant risk areas identified.

 Carry out an efficient, focused and effective audit.

 Reduce the risk of issuing an inappropriate audit opinion to an acceptable level.

 Minimise the risk of reputational and punitive damage.

3.2 Risk assessment procedures

 Enquiries with management, of appropriate individuals within the internal audit
function (if there is one), and others (with relevant information) within the client
entity (e.g. about external and internal changes the company has experienced)

 Analytical procedures

 Observation (e.g. of control procedures)

 Inspection (e.g. of key strategic documents and procedural manuals).

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