Practical Guidance 10 – Risk Assessment for Small CompaniesPublished on - Monday, November 14th, 2011
The identification and assessment of the risks of material misstatement in the financial statements during the planning stage of an audit affects the nature, timing and extent of the audit work to be performed to gather sufficient appropriate audit evidence. The risk assessment forms the foundation of an efficient and effective audit. It is important to understand the client’s business and modify the approach for every audit according to individual company’s risk and changes during the financial year to ensure sufficient and appropriate evidence was obtain to address the underlying assertions.
This Practice Guidance aims to provide some practical considerations to auditors in identifying and assessing the risks of material misstatement during the planning stage for audits of small companies where it is more efficient to adopt a substantive audit approach.
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