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risk assesment & analysis

Robin S (79 Points)

10 May 2007

hi friends,
is there anybody who can put some light on the topic ? as this is our new audit assigement in the current audit .wht? is actually risk assesment ,management & analysis.

thnkx,
robin.

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5 Replies

The One (379 Points)
Replied 10 May 2007

The One Says:

My friend Robin kindly ask a bit more of a specific question - however I can give you a general hint that a risk analysis tries to identify key areas of audit risk & risk to the enterprise using materiality for - risk based audits. Risk Management is a the continuous process that identifies and manages through various means like control, transfer, avoidance, reduction, insurance, mitigation, etc.

I would be glad to assist you further if you provide me with a specific question....

Robin S (79 Points)
Replied 10 May 2007

HI FRIENDS,
FIRST OF ALL THANKX FOR THE REPLY . WHT ? IS UR NAME .
I WANT TO KNOW HOW TO APPLY IT IN THE AUDIT I HAVE THE KNOWLEDGE BUT NOT THE KNOWING ?
I KNOW WHAT TO DO BUT I DONT KNOW HOW TO DO ?

The One (379 Points)
Replied 10 May 2007

The One Says:

Robin my friend its practically impossible to give you an entire risk assessment process here but I can provide you a brief idea.

One would look to establish within the Audit Universe according to the priority of areas which are affected by certain events based on the probability of their occurance and the monetary value and also other factors. The events can be internal/external or single loss events like fire or repetitive occurances such as bad debts. Elements of probability and the amount of control over the events are also considered. The process involves judgment ..... its not formulaic.

For any activity to be audited you would look at the goal or objective to be achieved (eg. debtors recovered in full and within credit period), the risks (eg. non-recovery, disputes & litigation, bad debts, insolvency), the impact/threat (loss of revenue and profits), the likelihood of occurance (this is based on judgment and past knowledge, analysis of past trends) and the actions taken by the management (credit rating process, approvals, internal controls, discounts, factoring, etc.).

The Assessment could lead to end results of High Medium Low or is numbers are assigned then percentages can be calculated (0 for no risk upto 5 for very high risk).

Based on this assessment the auditor would base the extent, nature and timing of his procedures.

Do let me know if you find this useful.

Robin S (79 Points)
Replied 10 May 2007

Thanks for spending time for answering my query.
tell me something abt urself
whts ? ur name.

Thanks again

robin sojrani,

The One (379 Points)
Replied 10 May 2007

The One Says:

Robin since you ask again I can tell you I am a CA and CS.

I prefer to remain anonymous ...... I assume information provided by me was useful to you my name is not important.

Let me know if you have some further query if within my capabilities I will try to solve it. (Please don't ask academic guidance I was never a very good student ;) )