Data Driven Audit Engagement Workflow Milestone – Risk Assessment

February 27, 2023

In a previous article, Data-Driven Audit Engagement Workflow, we discussed the Data Driven Audit and the background to a Data Driven Audit Engagement workflow. We also broke down the workflow down in to the the four milestones as we work through the phases of the audit.

  • Planning  
  • Risk Assessment  
  • Substantive Testing  
  • Concluding  

In this post we will consider the Risk Assessment milestone. ICYMI catch up with our deeper dive in to planning – Data Driven Audit Engagement Workflow Milestone – Planning.  

The data-driven element and workflow should be applied across all phases of the audit. By applying a consistent and clear approach from the beginning to the end of the engagement, everyone is working in the same way. Different levels of the engagement team – from junior staff to managers to partners – have different responsibilities, but they all use the same workflow, data, and screens in the platform. This enables us to streamline the process, get rid of redundant tasks, and work smarter.

Response to Risk

The Digital Audit methodology provides a clear structure to the response to risk, aligning audit work with the risk being addressed. The response to risk activities are driven by the decisions made during the risk assessment process.  

Appropriate responses and audit plan are recommended based on those decisions, promoting more effective and valuable auditing techniques.

Consistent Structure

Each workprogram is split into the following sections:  

  • Testing approach  
  • Perform testing  
  • Document Results
  • Conclude on testing  

Response Design

Response to risk includes the following categories:

  • Accounting estimates
  • Controls
  • Substantive Audit Data Analytics (SADAs)
  • Substantive Analytical Procedures (SAPs)
  • Substantive Tests of Detail
  • Other

Workprograms Library

  • Pre-designed workprograms
  • Specifically designed for each audit test
  • Powerful features, such as pre-populated responses, embedded automation and analytics, templates and guidance

Embedded Logic

  • Safeguards & quality checks to ensure appropriate decisions are made
  • All relevant assertions are considered
  • Auditing requirements regarding responses to significant risks are also embedded

Risk Response Summary Workprogram

  • Appears for each area where a response to risk is required
  • Includes an overview of the results of all testing performed, including the progress status
  • Shows any Findings or Misstatements raised
  • Includes overall conclusion on the work performed in the area

Substantive testing workprograms have a consistent structure design, based on the key steps an auditor needs to take when performing any substantive procedure.

A library of workprograms are specifically designed for each audit test, and include many powerful features such as pre-populated responses, embedded automation and analytics, templates and guidance.

The response to risk process is also supported by several in-built safeguards and quality checks to ensure appropriate decisions are made. Embedded logic includes ensuring that there is an appropriate response to all relevant assertions, and that the response to significant risks includes substantive procedures other than SAPs.

The Risk Response Summary workprogram includes an overview of the results of all testing performed within that Area and the progress status of that testing, any misstatements or findings identified, and the overall conclusions drawn. This offers senior team members and reviewers a single, consolidated viewpoint, allowing them to more easily navigate work performed and get more value from the time they invest in the engagement.

To find out more about Response to Risk read our Adopting the Digital Audit using Inflo Case Study which includes several examples including how within Inflo Workpapers, the Response to Risk view hasis been populated with the planned approach that was designed and finalized in the Risk and Response area.

Read more on the Data Driven Audit Engagement Workflow in our free guide.

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