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Hi,
I get abit confused on the following:
explain audit risk
evaluate audit riskWith evaluate do I go on to explaining the significance of each audit risk?
Thank you!
Monica
Hi Monica
This is an awful question! Literally the word “evaluate” means “put a value on”
How is it possible to put a value on audit risk?
You can put a value on materiality thresholds.
You can put a value on present value of future pension obligations
You can put a value on items put into the hands of an auctioneer for the television programme, Flog It
But how do you put a value on audit risk?
Instead, the examiner is looking for an intellectual paper that identifies audit risk and its various components and assesses how relatively material / important those risks are
I assume that you are comfortable with having to “explain audit risk”
Dear Tutor,
There is an Exam Focus Point in BPP and it says students lose marks by not stating the category of the audit risk, e.g. Inherent Risk, Control Risk, etc. And in their example, they classify risks according to these sub-headings.
However, the ACCA solutions do not have these sub-headings.
Kindly assist.
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