O'Reilly logo

Accounting All-in-One For Dummies by Jill Gilbert Welytok, Tage C. Tracy, John A. Tracy, Vijay S. Sampath, Maire Loughran, Frimette Kass-shraibman, Mark P. Holtzman, Lita Epstein, Ken Boyd

Stay ahead with the world's most comprehensive technology and business learning platform.

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, tutorials, and more.

Start Free Trial

No credit card required

Chapter 3

Assessing Audit Risk

In This Chapter

arrow Identifying the three types of risk related to audits

arrow Brushing up on risk-assessment procedures

arrow Figuring out the difference between errors and fraud

arrow Acting on your audit-risk results

This chapter introduces you to two important auditing concepts: audit risk and materiality. Audit risk is the chance that you won't catch a major mistake in the financial statements. Materiality refers to whether the mistakes you find are classified as significant or insignificant — in other words, as material or immaterial. A material amount is large enough to possibly influence the conclusions drawn by the person reading the financial statement.

These concepts are fundamental; you'll look to both as you plan the audit and implement the steps you decide to use during the audit. You'll also consider them as you evaluate the results of all your hard work to form an opinion about the fairness of your client's financial statements. These concepts are so important that the auditor's standard report refers to both.

Assessing audit risk is your phase-two responsibility ...

With Safari, you learn the way you learn best. Get unlimited access to videos, live online training, learning paths, books, interactive tutorials, and more.

Start Free Trial

No credit card required