Assessing and Responding to Audit Risk in a Financial Statement Audit: Audit Guide

Bottom line: If you're conducting a financial statement audit, then these are the principles to follow

The Assessing and Responding to Audit Risk in a Financial Statement Audit guide covers the core principles of the risk-based audit methodology that must be used on all financial statement audits.

You'll find an easy-to-understand style that addresses the issues you encounter in the field. And no matter your experience level, you'll benefit from the unique insights, examples and a comprehensive case study that clarify critical concepts and requirements.

Bonus Audit Risk Assessment Tool for Online Subscriptions

The Audit Risk Assessment Tool is automatically included only when you select the Online Subscription format.

The tool explains the risk assessment procedures to experienced auditors, and documents those decisions necessary to prepare an effective and efficient audit program.

Use the tool in place of cumbersome checklists. It will guide you through a top-down risk-based approach to the identification of high-risk areas. That allows for appropriate tailoring of audit programs, resulting in audit efficiencies.

Disclaimer

This Audit Risk Assessment Tool is designed to provide illustrative information with respect to the subject matter covered and is recommended for use on audit engagements that are generally smaller and have less-complex auditing and accounting issues.

It is designed to help identify risks, including significant risks, and document the planned response to those risks. The Audit Risk Assessment Tool should be used as a supplement to a firm's existing planning module whether in a firm-based or commercially provided methodology.

The Audit Risk Assessment Tool is not a complete planning module.

The AICPA recommends that audit professionals with substantial accounting, auditing and specific industry experience and knowledge complete the Audit Risk Assessment Tool. For a firm to be successful in improving audit quality and efficiencies, it is recommended that a 5+ years experienced auditor completes the Audit Risk Assessment Tool or the engagement team member with the most knowledge of the industry and client (often Partner in small/medium firms) provides insight to whomever is completing the ARA Tool.

The AICPA recommends this should not be delegated to lower-level staff and just reviewed – it should be completed under the direction of the experienced auditor (if you delegate to inexperienced auditor, you will be at risk for less effectiveness and efficiencies because the tool is intended to be completed by an experienced auditor).

Testimonials

Here's what fellow CPAs are saying about the Audit Risk Assessment Tool.

"An elegant device that facilitates compliance with the standards." – W. Douglas Logan, CPA, P.C.

"I was able to complete the risk assessment process faster compared to {a checklist method} ... By identifying the significant areas/risks, we were able to focus on those areas and tailor the audit programs accordingly." – Sole practitioner

"This process condenses the risk assessment down to just what you need to perform the risk assessment. The steps to get to the audit program generation were reduced, and I think you end up with a better and more complete product at that point. I think it makes your planning process better." – Partner from CPA firm with 18 professionals

"I think time was the biggest efficiency {gained by using the Audit Risk Assessment Tool}. The support and guidance made the process of assessing risk quicker and clearer." – Audit senior manager from CPA firm with 88 professionals

"It would be beneficial to use this streamlined tool on a smaller entity where our current forms may be more inefficient." – Audit supervisor from CPA firm with 400 professionals