Using Risk-Based Auditing Concept And Indicators Of Analytical Procedures In Assessing Risk Of The Material Misstatements

Abstract

The objective of the study is to estimate the risk of material misstatements and take it into account when planning the audit. The research hypothesis is: “Indicators of analytical procedures, primarily relative importance and growth, contribute to designing a method for estimating the risk of material misstatements, and this is reflected in the choice of methods for determining audit procedures.” The practical aspect was prepared through an analytical study in an Iraqi tourism company, adopting a model prepared to use indicators to estimate the risk of material misstatements. The elements of the financial position statements and the income statement were selected in the field of application of the research. An exploratory study was also conducted on a number of auditors to determine the extent to which they adopted the concept of risk-based auditing and indicators of analytical procedures in their field work. The most important conclusions are that there is a need for the auditor to take into account the risks of fraud and material errors by applying a set of analytical indicators. Assessing the risks of misstatement helps determine a methodology for dealing with and reducing the risk by determining the nature, time and extent of audit procedures