The AICPA Auditing Standards Board (ASB) recognizes that many auditors struggle to adapt risk assessment requirements to smaller, less-complex entities. To address auditors' concerns, the ASB has incorporated scalability options into Statement on Auditing Standards No. 145, Understanding the Entity and Its Environment and Assessing the Risks of Material Misstatement, as codified in AU-C Section 315.
This article provides practical examples on how auditors can use their professional judgement in applying risk assessment procedures to entities of varying complexity.