Financial Education - Risks of impropriety and International Auditing Standards

In some countries, the objective and scope of an audit and the auditor's responsibilities are established by law, but even in those situations the auditor may still find that engagement letters are informative to his or her clients.

According to International Standards on Auditing, risk assessment procedures include the following: inquiries of management and others within the entity who in the auditor's judgment may have information that could facilitate the identification of risks of material misstatement due to fraud or error, analytical procedures, observation and inspection.

Therefore, the auditor will consider whether the information obtained from the client acceptance and continuity process performed by the auditor is relevant to identify risks of material misstatement so that the auditor should know whether the engagement partner has performed other engagements for the entity, considering whether the information obtained is relevant to identify risks that may arise in the company.

In addition, the engagement partner and other key team members jointly discuss the likelihood of material misstatements in the entity's financial statements, and the application of the applicable financial reporting framework to the entity's facts and circumstances.

In summary, this International Standard on Auditing shows the necessary steps that can be taken to avoid any errors and fraud that may affect the organization in terms of the risks that may threaten the achievement of any business objective.