Audit And Risk Based Audit Essay

946 Words Dec 18th, 2016 4 Pages
Individual Assignment 1
Submitted by Jeewan Koirala
Answer 1
Audit firms adopt the approaches for auditing the specified audit assignment which will be the key factor to determine the outcome of that audit. Risk based audit approach is related towards the company’s financial statements that may contain misstatements which can happen by omission or error as risk consequences faced by business. If auditors failed to go for correct approach there is more likeliness of failing of audit and this failure will lead to legal case against the audit firm and also will damage the reputation of the firm. Risk based audit approach is implemented by effectively and in systematic way by focusing in nature,timimg and auditing to the most potential areas that may cause misstatements in the company’s financial report.ASA 315 Identifying and Assessing the risks of material misstatement through understanding the entity and its environment as amended and ASA 300 IS Auditors response to assessed risk. The risk based approach makes auditors to realise about the entity and about its environment to help prevent risk of statements or to isolate risk which may result in misstatement of the financial report. Auditors do valuation of risks at fiscal and assertion levels. When assessing this many factors should be considered like nature of the risk, internal controls audit verification in relevant and compulsory level. Responsibility of auditor is designing and implementing the auditing to achieve…

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