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Special risk areas at the planning stage

AUD Chapter 17 · Area II · Blueprint II.G

Four areas get their own rules because ordinary risk assessment tends to miss them: laws and regulations, accounting estimates, related parties and the single audit of federal awards. This chapter covers what the auditor must understand and plan for. The detailed testing of estimates and federal awards comes back in Area III.

In this chapter

1. Laws and regulations: two categories, two duties
2. Testing compliance, and what to do when it fails
3. Accounting estimates: why they are risky
4. Spotting management bias in estimates
5. Related parties: finding who is connected
6. Significant unusual transactions and executive officers
7. The single audit: when it is required and what gets tested

This chapter has 7 lessons, 50 practice MCQs with explanations and 14 simulations, plus flashcards and a recall sheet.

What this chapter covers

• Laws and regulations with direct and indirect effects
• accounting estimates and management bias
• related parties and significant unusual transactions
• when a single audit is required

Chapter 16: Using the work of others · Chapter 18: Working with data