Learning Objectives

Understand the concept of audit risk.

Learn the form and components of the audit risk model.

Understand how to use the audit risk model.

Understand the auditor's risk assessment process.

Identify the factors that determine the auditor's assessment of the risk of material misstatement.

Learn how to respond to the results of the risk assessments.

Learn how to evaluate the results of the audit tests.

Understand the documentation requirements for risk assessments and responses.

Learn the auditor's communication requirements to management and the audit committee.

Learn the limitations of the audit risk model.

Understand the concept of materiality.

Identify the steps to applying materiality in an audit.

Apply the materiality steps to an example (EarthWear).