Audit Risk

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Audit Risk

The risk to a company or investor that an audit will not discover some accidental or intentional irregularity, either through negligence or mal intent. This may result in significant losses to the company and its investors once the irregularity is finally discovered. It could also result in a lawsuit against the auditing firm that conducted the audit.
References in periodicals archive ?
The issues are among "key audit risks" identified for Audit Scotland's annual independent review of the development agency's "financial health and performance".
New York, NY, May 18, 2019 --(PR.com)-- The Knowledge Group/The Knowledge Congress Live Webcast Series, the leading producer of regulatory focused webcasts, has announced today that Charles Maniace, Director of Regulatory Analysis with Sovos, will speak at The Knowledge Group's webcast entitled: "Ensuring Compliance with Tax Laws and Minimizing Audit Risks with Sales Tax Automation: Practical Guide for Businesses." This event is scheduled for Wednesday, July 31, 2019 from 3:00 pm to 4:30 pm (ET).
This article argues that the Treasury Department and professional organizations should make it clear that tax return preparers may make full disclosure of Service audit risks to the extent this information is known.
The SEC concluded that, for the 2000 audit, "notwithstanding that Deloitte had identified nine specific audit risks, Deloitte failed to do any meaningful assessment of whether those risks had been appropriately addressed."
However, ongoing tax audit risks, SEC, and Department of Justice investigations, and related litigation issues offset these strengths, S&P added.
They explore such topics as earned versus unearned income, innocent and injured spouse issues, writing off job-hunting costs, increasing the home's tax basis, accounting for the kiddie tax, required minimum retirement distributions, the trouble with tax protests, and minimizing audit risks.
* Auditors must develop audit plans in which they document the audit procedures that are expected to reduce the audit risks to acceptably low levels.
An important feature of the audit-planning process, relevant to this study, is that the audit plan and procedures to be performed rely in part on the client's control system and in part on specific audit risks (Robertson and Smieliauskas 1998).
This reasoning implies that industry-specialist auditors are likely to better recognize the audit risks associated with an engagement when they face a client in that industry as opposed to another industry.
The purpose of this study is to assess empirically whether component audit risks are assessed independently or are assessed interdependently and conditionally (i.e., configurally).
In order to identify audit risks, the accountant should evaluate closely management's understanding of the accountant's responsibilities and prior audit history, the reasons for changing accounting firms, management's integrity, the technical ability of the accounting firm to serve the client, the accounting firm's "independence" and any other special circumstances.
It is doubtful that auditors can actually quantify audit risks, much less eliminate them.