Audit Risk

Question 1

Audit risk: Financial statements level

Answer 1

Integrity of management
Management experience and knowledge
Nature of business
Factors affecting the industry e.g. economic conditions

Question 2

Audit risk: account/assertion level

Answer 2

Thus a specific account that can be debited and credited

• Accounts that involve a high degree of estimation (e.g. impairment)
• Complexity (e.g. complex tax calculations)
• Degree of judgment in determining account balances (e.g. provision for doubtful debts)