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Risk Based Approach, Methods of Risk Assessment, Materiality, Materiality…
Risk Based Approach
Implementation
1 Analyze risks associated with client's business, leading to material misstatements
2 Test riskiest areas, transactions and classes
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Materiality
Definition
If by omitting, misstating or obscuring expected to influence decisions of the users
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Materiality 2
At the audit stage
Planning stage:
nature, timing and extent of procedures
Execution & completion:
Misstatements effect on true and fair
Material by:
Nature, related party and director
Size, magnitude
Impact, converting loss to profit