Risk assessment and audit approach
Audit planning and risk management are inextricably linked. You will find several great books that dig into the complexities of the full risk assessment process. We can extract some of the key items related directly to audits here. Effective risk management is predicated on identifying and understanding potential risks, which is a central aspect of audit planning. During the planning phase, auditors assess various risk factors, such as the likelihood of data breaches, system failures, or compliance issues. This risk-focused approach ensures that the audit targets areas of highest risk, enhancing the audit’s overall effectiveness.
Audit risks versus risks identified by the audit mission
It’s important to distinguish between audit risk(s) and risks identified and covered by the audit mission. Let’s take a closer look:
- Audit risk(s): This refers to the risks that an auditor may fail to detect. These could be significant...
