Risk Assessment Objective (2)

Question 1

What may the auditor also seek?

Answer 1

To use automated tools and techniques as part of the risk assessment

Question 2

Example of automated tools and techniques (observation)

Answer 2

Remote observation tools could be used when inspecting certain assets

Question 3

Example of automated tools and techniques (analysis)

Answer 3

Auditor can obtain digital downloads of accounting records and use data analytics techniques to analyse prioritisation of significant risks of material misstatement

Question 4

Example of automated tools and techniques (posted)

Answer 4

Analysis of accounting records could include journals to identify those posted outside of normal working hours

Question 5

Example of automated tools and techniques (populations)

Answer 5

Entire population of transactions could be analysed to identify situations that could indicate a higher position on spectrum of inherent risk

Question 6

Examples of a higher position on the spectrum of inherent risk?

Answer 6

Account balances that are zero at the reporting date but which have seen isngiificant transactions and journal entries during the period, suggesting possible manipulation

Question 7

What is done to assist the auditor?

Answer 7

Key messages from data analytics procedures using a dashboard

Question 8

What do data analytics do?

Answer 8

Highlights significant matters for the auditor’s attention

Question 9

How must the auditor perform their risk assessment?

Answer 9

In a way that is not biased toward obtaining corroborative evidence, or excluding contradictory evidence

Question 10

What must auditor exercise in a risk assessment?

Answer 10

Professional scepticism, and be open to evidence that may undermine the narrative that management gives them