Risk Assessment and Planning

Risk assessment, planning, and budgeting of audits are essential precursors to the successful audit. The determination of risk of a particular subset of accounting operations related to the rendering of the audit opinion-i.e., on whether the accounts have material error when GAAP has been consistently applied. This chapter delineates construction of the risk assessment matrix-a collaborative “learning” worksheet to support a scientific foundation for audit scope, planning, and budgeting prior to initiation of audit field tests.