Audit Planning & Risk Assessment

Audit Risk Model

• audit risk is the risk that the auditor expresses an inappropriate opinion on the financial statements, comprised of material misstatement risk and detection risk

• For material misstatement, it’s the risk that the FS is materially misstated prior to the audit commencing and is compromised of inherent risk and control risk. This could be due to either:

  • the numbers being misstated, missing or inadequate disclosures, or the basis of preparation being inappropriate