audit-assurance-risk-assessment

Risk Assessment — Audit & Assurance

Identify, score and control the risks in work for companies, charities and public bodies requiring an audit in an accountancy firm and client sites. The deliverable is a risk assessment with likelihood/impact scores, controls and owners. This skill is written for a external auditor working with companies, charities and public bodies requiring an audit in an accountancy firm and client sites.

When to use

• You are a external auditor preparing, delivering or reviewing this part of your work in an accountancy firm and client sites.
• You need a defensible, repeatable approach that produces a risk assessment with likelihood/impact scores, controls and owners.
• A colleague, auditor or client asks how this was done and what evidence supports it.

Key Concepts

Term	Meaning
Materiality	the size at which errors could influence decisions
Working papers	the evidence and analysis behind an audit
Independence	freedom from interests that could bias the auditor

Workflow

1. Step 1 - Map the activity step by step and list what could go wrong at each stage for companies, charities and public bodies requiring an audit and staff
2. Step 2 - Score each risk for likelihood and impact, giving special weight to material misstatements missed
3. Step 3 - For every high risk, define a control that removes, reduces or contains it, using audit software where relevant
4. Step 4 - Record the assessment in audit plans, assign an owner to each control, and set a review date
5. Step 5 - Brief everyone involved before work starts; stop and reassess if conditions in an accountancy firm and client sites change

Profession-Specific Components

Component	Details for Audit & Assurance
Core documentation	audit plans; working papers; management letters; audit reports
Core tools & equipment	audit software; data analytics tools; sampling tools; document portals
People involved	companies, charities and public bodies requiring an audit; the external auditor; colleagues and other services in an accountancy firm and client sites
Primary record	audit plans — keep it current, dated and attributable

Output Format

Context: [Situation in an accountancy firm and client sites] | Objective: [What this must achieve] | Audience: [companies, charities and public bodies requiring an audit and other stakeholders]

The finished output is a risk assessment with likelihood/impact scores, controls and owners, structured as:

1. Summary of position and evidence
2. Detail, following the workflow above
3. Decisions, actions, owners and dates
4. Review point and escalation route

Action Plan

1. Immediate: Confirm scope, consent and the evidence available in audit plans.
2. Short-term: Complete the workflow steps and record outcomes against audit completion times.
3. Medium-term: Review results, close actions, and update local procedures in an accountancy firm and client sites.

Success Metrics

Metric	Target	Method
audit completion times	Agree a local target and track the trend	Measured from audit plans and reviewed on a set cycle
adjustment counts	Agree a local target and track the trend	Measured from audit plans and reviewed on a set cycle
deadline compliance	Agree a local target and track the trend	Measured from audit plans and reviewed on a set cycle
client feedback	Agree a local target and track the trend	Measured from audit plans and reviewed on a set cycle

Guardrails & Quality Checks

• Never let this happen: material misstatements missed.
• Never let this happen: independence threats.
• Never let this happen: deadline overruns.
• Work only within the competence and authority of a external auditor; escalate or refer anything beyond it.
• Record facts and observations, not speculation, and keep records confidential to an accountancy firm and client sites's rules.
• Verify names, dates, figures and measurements twice before anything is issued or signed off.
• Use only real, verified information from the case in hand — never invent results, credentials or evidence.

Example (illustrative)

A external auditor in an accountancy firm and client sites applies this workflow for companies, charities and public bodies requiring an audit: they open audit plans, work through the five steps using audit software, and close by recording the outcome against audit completion times and agreeing the next review date. (Illustrative example only — replace with the real details of the case in hand.)