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Hi. I would like to ask, if we were given a question about “audit risk” or “risk of material misstatement” in the AAA exam, is the technique of answering these two questions similar, i.e. figuring out the relevant ISAs, considering appropriate accounting treatment, and the risks involved, and the difference is just that “risk of material misstatement” happens before audit, whilst “audit risk” happens after audit?
Thank you.
If asked for audit risk you should be alert to the possibility of making valid points about detection risk. If asked only for RoMM you don’t need to consider detection risk.
And in the exam, we do not need to write the ISA numbers and names. We just need to write the content and the accounting treatment which specifically relates to the case scenario. Am I correct?
Thank you.
By the way, does this also mean that questions about “audit risks” and “RoMM” will never come out together under one case scenario, since they are similar? It’s either “audit risks” and perhaps “matters to be considered” together, or “RoMM” and “business risks” together under one case scenario?
Thank you.
ROMM is a subset of audit risk – see the “model” in our notes – so it will be one or the other with or without business risk.
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