AUDIT RISK and Auditor Response
Importance of AUDIT RISK and Auditor Response assessment
1. Assessing engagement risks at the planning stage, will ensure that attention is focused early on the areas most likely to cause material misstatements.
2. It will help the auditor to fully understand the entity, which is vital for an effective audit.
3. Any unusual transactions or balances would also be identified early so that these could be addressed in a timely manner.
4. Assessing risks early is an efficient practice by auditors. The auditors will only focus their time and effort on key areas as opposed to transactions or balances that might be immaterial or unlikely to contain errors.
5. As well as assessing risk early should ensure that the most appropriate or most experienced team is selected and staff allocated to higher risk audits and high-risk balances.
6. A thorough risk summary should sequentially reduce the risk of an inappropriate audit opinion being presented.