Assessing and Responding to Audit Risk In a Financial Statement Audit – AICPA Audit Guide

A financial statement audit is a risk-based process.  Audit quality and engagement efficiency both depend on the auditor’s ability to assess and appropriately respond to risks of material financial statement misstatements.

Updated with conforming changes as of October 1, 2009 the AICPA Audit Guide Assessing and Responding to Audit Risk in a Financial Statement Audit provides authoritative and comprehensive guidance on the risk-based audit process that is required on all financial statement audits.  The core principles of this audit methodology include:

• Understanding the client’s business
• Evaluating internal control
• Assessing risk
• Designing and performing tests of controls and substantive tests that are linked to assessed risks
• Evaluating audit findings, including control deficiencies identified during the audit.

The guide is written to help answer questions and address practice problems encountered by field auditors of all levels of experience by providing:

• Best practices and unique insights not found in the original standards
• Examples and illustrative audit documentation
• A comprehensive case study

What’s New in the Second Edition

The most recent edition of the guide incorporates the feedback of dozens of practitioners who shared their observations about the issues their firms faced when first implementing risk-based audit principles.  This new edition provides auditors with a roadmap for firms to improve audit efficiency without sacrificing audit quality by including expanded guidance on:

• Applying a risk-based audit methodology on small business audits
• Evaluating internal control
• Understanding and responding to risks associated with the entity’s IT systems
• Updating the auditor’s understanding of the client and its environment
• Testing controls
• Audit sampling

The guide also includes relevant guidance from official pronouncements and other guidance issued since the previous edition, including:

• SAS No. 115, Communicating Internal Control Related Matters Identified in an Audit
• Recent questions and answers issued in TIS section 8200, Internal Control
• AICPA Audit Guide Audit Sampling

The new guide makes it even easier for auditors to research and resolve specific audit issues by incorporating new features such as:

• A topical index
• A glossary
• Frequently-asked questions and answers for each chapter

A new appendix of example learning objectives helps course developers create training materials that convert abstract concepts into improved job performance.