Identifying, assessing and responding to risks of material misstatement are at the core of every audit. However, data collected by the AICPA Peer Review Program in 2016 show that more than 1 in 10 firms failed to comply with AU-C Section 315, Understanding the Entity and Its Environment and Assessing the Risks of Material Misstatement, or AU-C Section 330, Performing Audit Procedures in Response to Assessed Risks and Evaluating the Audit Evidence Obtained.
The resources below will help you perform more effective risk assessments, appropriately link your risk assessments to your audit procedures and comply with the standards.
Risk Assessment Standards
Risk Assessment Tools
- Audit Risk Assessment Tool
This comprehensive template will help you identify, assess and document your planned response to risks of material misstatement and make your audit more effective and more efficient.
Use the following videos to guide you through utilizing the tool:
Infographic—The four most common risk assessment violations: Learn about the most common areas of non-compliance with AU-C 315 and 330 identified by the Peer Review Program.
- Internal inspection aid: This tool will help you identify non-conformity with AU-C 315 and 330 during your firm’s internal inspection. The aid also provides guidance on how those findings should be addressed.
- Aid for identifying controls at smaller entities: You may think a smaller client has no controls, but that’s virtually never the case. Even the smallest entities have policies and procedures designed to prevent or detect and correct material misstatements. This aid will assist you in identifying controls at your smaller clients.
- Frequently asked questions: Get answers to the most common AU-C 315 and 330 questions received by the Center for Plain English Accounting (CPEA). The CPEA’s team of experts helps member firms understand and implement standards by sharing technical advice in a straightforward manner.
- Why assess audit risk? So you don’t get lost in the woods, AICPA Insights, August 2018
- Taking the risk out of risk assessment, Journal of Accountancy, August 2018
Related Tools and Products
- Audit guide—“Assessing and Responding to Audit Risk in a Financial Statement Audit”: The definitive source for guidance on applying the core principles of the risk-based audit methodology required for all financial statement audits.
- Register for the webcast—“Risk Assessment Deep Dive: How to Avoid Common Missteps”: Register for an upcoming webcast in which Chuck Landes, CPA, AICPA Vice President of Professional Standards and Services; and Carl R. Mayes, Jr., CPA, AICPA Senior Manager, Special Projects discuss how to properly implement the risk assessment standards and avoid common missteps.