1. An Introduction to Risk Based Auditing
Stuart Hartley FCA
FocusROI Inc

2. The Audit Objective (ISA/CAS 200)
To obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error,
thereby enabling
the auditor to express an opinion on whether the financial statements are prepared, in all material respects, in accordance with an applicable financial reporting framework;

3. The Audit Process - in 3 steps
Risk assessment – What can go wrong?
Perform risk assessment procedures to identify and assess the risks of material misstatement in the financial statements.
Risk Response – Did it go wrong?
Perform further procedures to respond to the assessed risks and determine if material misstatements have occurred.
Reporting. – Opinion
What is the appropriate wording of the audit opinion based on the work performed?

4. Basic Audit Requirements ISA/CAS 200
Comply with relevant ethical requirements,
Plan and perform an audit with professional skepticism
Exercise professional judgment in planning and performing an audit
Obtain sufficient appropriate audit evidence to reduce audit risk to an acceptably low level
Comply with all CASs relevant to the audit

5. An audit in 14 Steps

6. Scope of Risk/Control Assessment

7. Pervasive vs Transactional
The foundation

8. Scope of Risk/Control Assessment – Consider using the 3 risk/control Categories
Entity
Specific
Pervasive
Transactional
C-PEM Form
520/522
C-PEM Form
530
C-PEM Form

9. Identifying and Assessing Risk
Document Results
Assess RMM
Copyright FocusROI 2013

10. F/S Level Assertion Level Pervasive risks/controls Transactional
(account balance)
Transactions
Entity
Specific
Use of Professional
Judgment to assess
RMM
Categories of Risk and Control
Note that the entity specific risks could be either a pervasive or transactional.
Use the following example: by not having any financial expertise on an audit committee, there would be a pervasive risk that would factor into the assessment of risk at the financial statement level.
A concern as to the valuation of inventory at year end would be a transactional risk that would factor into the assessment of risk at the assertion level.
Note that the assessment of risks is always a matter for professional judgment.
Risk Assessments

11. Risk Response

12. Reporting
Review the three major elements involved in the reporting phase.

13. CPEM 2014 The Canadian Professional Engagement Manual
A practical approach to auditing
The Canadian Professional Engagement Manual
Published by CPA Canada
members/5

14. In house and web based Training Quality Control Monitoring
FocusROI Services
In house and web based Training
Quality Control Monitoring
Small group Coaching

15. Please contact us for further information info@focusROI
Please contact us for further information