ACCT 107 Chapter Notes - Chapter 12: Audit Risk, Audit Evidence, Internal Control
21 Oct 2020
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Document Summary
Relationship of risks to evidence and factors influencing risks. 231 shows a summary of relationships between the types of risks. Auditors respond to risk primarily by changing the nature and extent of testing and types of audit procedures, including unpredictability in the audit procedures used. There are two other ways auditors can change the audit to respond to risks: the engagement may require more experienced staff. If romm is high for certain assertions for an account, the reviewer will likely spend more time making sure the evidence was appropriate and correctly evaluated. The romm, control risk and inherent risk are assessed for each assertion in each segment of the audit. If there"s a low romm in the fs and internal controls are effective, a high planned detection risk is appropriate and a low level of substantive evidence is needed. Using a decision aid to link risk assessment to evidence planning.
