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Essay / Research Paper Abstract
This 3 page paper considers what it mean by audit risk from the perspective of the external auditor and consider how they would approach auditing from a risk basis. The paper includes consideration of the different types of audit risk. The bibliography cites 3 sources.
Page Count:
3 pages (~225 words per page)
File: TS14_TEriskaudit.rtf
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Unformatted sample text from the term paper:
all transactions to make sure they are all correct, not can they check that all transactions have been recorded, this would be impossible. The role is therefore to look
at the accounts and the systems, use a sample of the transactions to test the systems that are in place to record the transactions and the way they are used
and to assess to what extent these can be relied upon to produce accounts that are materially accurate. It is not the job of the auditors to detect fraud or
look for inaccuracies unless they could be deemed material (Cosserat, 2004). When looking at this it is apparent how there is a subjective aspect to auditing as well as
the objective procedures. One aspect that needs to be considered in the way an audit is designed and carried out is that of audit risk. However, it also has to
be remembered that the auditors job is to express an opinion, and as such an assurance is not a certification of correct accounts, this is due to audit risk. However,
a good knowledge and an effective audit can reduce audit risk. Audit risk means that the wrong opinion is given, either an unqualified opinion being given when a qualified opinion
should have been given or a qualified opinion when an unqualified opinion should have been awarded. There are three types of audit risk; inherent risk, control risk and detection
risk (ACCA, 1999). The first of these is inherent risk. Inherent risk is the risk that certain transaction types or an account balance may be misstated, either due to individual
transactions or as the result of an aggregate impact with misstatements from other areas, this may be irrespective of the internal controls (ACCA, 2003). If the level of the data
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