February 15, 2021 @ 5:30 am - January 2, 2025 @ 5:30 am$275
As part of the audit process, the auditor seeks to reduce the risk of material misstatement to a suitably low level. The identification and assessment of actual or potential risk is therefore a key part of the audit process. A risk assessment will assist the auditor in determining the appropriate audit procedures based on the characteristics of the fund. Some high-risk areas for SMSFs include the risk of fraud, complex transactions, related party transactions and breaches of the SIS Act and SIS Regulations.
When it comes to audit evidence, there are several risk considerations in relation to its source, nature and circumstances under which it is obtained. For example, should the audit procedures differ where financial reporting processes are provided by SMSF software companies using data feeds? The assessment and consideration of risk facilitates the auditor’s design, documentation and implementation of the audit plan.
The materiality level set by the auditor will impact the risk of material misstatement. Materiality relies on the auditor exercising their professional judgement rather than the use of a prescriptive method of calculation. The auditor must use their skill, expertise, and experience to assess the information and documentation. The application of these audit procedures establishes the foundation for the audit and the nature and extent of the audit activities to be undertaken by the auditor.
On completing this module, participants should be able to:
- discuss the audit planning process and purpose
- explain risk, types and sources of risk and the impact of risk on the audit
- discuss the importance and timing of materiality and the processes in assessing and documenting
- understand the relationship between planning the audit, risk and materiality and their role in establishing the nature and scope of the audit