- This topic has 4 replies, 2 voices, and was last updated 1 year ago by
.
- Posts
Hi Kim,
May I please get some explanation of what the actual difference between Risk Assessment Procedure vs Identifying and assessing risks?
According to ISA 315, Risk assessment Procedure is defined as a process of identifying and assessing risks of MM due to fraud or error at the FS and Assertion level.But at the same time, ISA 315 divides Risk Assessment Procedure and Identifying and Assessing risks into different sections. So I am a little bit confused on this one.
Thank you so much!
CJGood morning! I’m not entirely sure what the query is here – your definition of risk assessment procedures is correct (as stated in the Glossary of Terms).
Our summary of risk assment procedures can be found at the bottom of page 52 of the notes – this is para 14 in ISA 315.
“to identify and assess …. RoMM” is the purpose of a risk assessment procedure.
As an example of “inquiries of management” … auditor asks the head of internal audit whether IA found any significant deficiencies in internal controls in their testing … answer is “yes, somewhere in revenue (say)”. That identifies a RoMM (e.g. in revenue recognition) but it’s not enough to assess it. So the auditor will also carry out analytical procedures (e.g. on monthly revenue).
The section “Risk Assessment Procedures and Related Activities” (paras 13-18) are the requirements for “actions” in risk assessment.
The section “Identifying and Assessing the Risks of Material Misstatement” (paras 28-37) breaks down the requirement to identify and assess risks into consideration of RoMM at the financial statement and assertion levels.
Hi Kim,
I see! I was just confused if Risk Assessment Procedure and Identifying and Assessing risks had two different meanings as they have been separately narrated in the ISA 315.
Your explanation now helps me! Thank you always 🙂
CJ
- The topic ‘ISA 315 (Difference between Risk Assessment Procedure and Identifying and Assess’ is closed to new replies.