Home / CPA Course / AUD

Assessing and responding to the risk of material misstatement

AUD Chapter 15 · Area II · Blueprint II.E

This is the heart of the audit and the largest group in Area II, with eleven Blueprint tasks from application up to analysis. Everything you learned about the business, controls and materiality is turned into a risk assessment here, and the risk assessment decides the work. If you master one chapter in AUD, make it this one.

In this chapter

1. The audit risk model
2. Two levels: the statements and the assertions
3. Inherent risk, control risk and significant risks
4. Fraud: two kinds, three conditions
5. Fraud found or suspected: who is told and what is written down
6. Overall responses at the financial statement level
7. Further audit procedures: tests of controls
8. Further audit procedures: substantive procedures
9. Putting it together, with the team and with data

This chapter has 9 lessons, 50 practice MCQs with explanations and 21 simulations, plus flashcards and a recall sheet.

What this chapter covers

• Fraud pressures, incentives and opportunities
• inherent and control risk at the assertion level
• overall responses
• tests of controls
• substantive procedures
• team discussion
• using data analytic outputs

Chapter 14: Materiality and performance materiality · Chapter 16: Using the work of others