SA 315: Risk Assessment#
Risk Assessment Procedures#
1. Inquiries of Management
- Nature of business
- Changes in operations
- New products or services
- Corporate governance
2. Analytical Procedures
- Ratio analysis
- Trend analysis
- Benchmarking
3. Observation and Inspection
- Inspect premises and facilities
- Review contracts and agreements
- Observe operations
Understanding Entity and Environment#
- Industry and regulatory environment
- Nature of entity
- Selection and application of accounting policies
- Objectives and strategies
- Measurement and review of financial performance
Understanding Internal Controls#
Components of Internal Control
- Control environment
- Risk assessment process
- Control activities
- Information and communication
- Monitoring activities
Types of Controls
- Preventive controls
- Detective controls
- Manual controls
- Automated controls
Assessing Risks#
- Inherent risk factors
- Control risk assessment
- Risk of material misstatement at financial statement level
- Risk of material misstatement at assertion level
Response to Assessed Risks#
- Overall responses
- Specific responses to assessed risks
- Nature, timing, and extent of procedures
Documentation#
- Risk assessment procedures performed
- Understanding of internal controls
- Conclusion on assessed risks