Risk-based approach to the audit 3 / 4

Risk-based approach to the audit

Carrying out a financial statement risk assessment

  1. helps the auditor ensure that the high risk areas where material misstatement might occur are adequately investigated and tested during the audit.

  2. helps the auditor identify low risk areas where reduced testing may be appropriate, ensuring time is not wasted by over-testing these areas.

Audits conducted in accordance with ISAs must follow the risk-based approach.

Auditors are therefore not concerned with individual routine transactions, although they will still be concerned with material, non-routine transactions.

We use cookies to help make our website better. We'll assume you're OK with this if you continue. You can change your Cookie Settings any time.

Cookie SettingsAccept