Risk-Based Audit Best Practices

By MICHAEL RAMOS, CPA

DECEMBER 2009

The aim of the risk assessment auditing standards was to improve the quality and effectiveness of audits by substantially changing audit practice. Statements on Auditing Standards nos. 104–111 provide increased rigor to the audit process in a number of key areas including the assessments of inherent and control risks and the linking of these risk assessments to further audit procedures.

This year marks the third anniversary of the standards’ effective date. Across the profession much progress has been made toward the ultimate goal of a more reliable audit process, but even more is possible as we continue to learn about the standards’ practical application.

This article captures some of the most important lessons learned and best practices that have emerged during the extended implementation of the risk assessment standards (see sidebar, “Methodology Behind Application Suggestions,” at bottom of page).

IMPLEMENTATION ISSUE NO. 1: EVALUATING INTERNAL CONTROL