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The Risk Assessment Standards establish standards and provide guidance concerning the auditor’s assessment of the risks of material misstatement in a financial statement audit and the design and performance of audit procedures whose nature, timing, and extent are responsive to the assessed risks. Auditors continue to struggle with effective and efficient execution of the Risk Assessment Standards.
The AICPA has drafted a whitepaper that attempts to simplify the practitioner’s understanding of the risk assessment standards and process by focusing on the end game and how that objective can be achieved in an effective, yet efficient, manner.
The AICPA has a number of other resources to help you understand and apply the requirements of the risk assessment process, including its release of an Audit Risk Assessment Tool, which is designed to walk an experienced auditor through the risk assessment procedures and document those decisions necessary to prepare an effective and efficient audit program. This tool is designed to be used in lieu of cumbersome checklists by providing a top down approach to the identification of high risk areas to allow for appropriate tailoring of audit programs which will result in audit efficiencies.