The use of analytical procedures in assessing audit risk

Abstract

The main aspect of the research problem is represented in the lack of interest in building a methodology that determines how to deal with the risks of auditing work by making use of the financial tools and indicators provided by the analytical procedures that work to assess those risks. Consequently, the aim of the study is to clarify the risks of auditing work, and their impact on formulating legal and professional responsibility, while explaining the role of analytical procedures in implementing audit tasks and evaluating these risks. The research is based on the following hypothesis: "The indicators of analytical procedures help the auditor in assessing the risks of his business, and choosing the means and tools that he can use to deal with those risks."

The two researchers prepared the practical side of the research by conducting an analytical study in one of the private Iraqi banks, the "Iraqi Credit Bank", by adopting a form prepared for the purpose of analyzing the use of analytical procedures to assess the risks of auditing work, and making a decision to accept or reject the unit subject to audit. One of the most prominent conclusions is that there is a need for the auditor to take into account the risks of auditing work by applying a set of indicators linked to the analytical procedures. The auditor's understanding of the risks of the audit work through the indicators of the analytical procedures helps in determining a methodology for dealing and reducing the risk by accepting or rejecting the unit subject to audit. As well as determining the nature, time and extent of the audit procedures. The most prominent recommendations were the need to take contract risks into account to protect the auditor from legal and professional accountability, which he may face from accusations of default by external users as a result of the gap between what is expected from audit performance and professional performance. The necessity to develop an assessment of the audit risks through what has been applied to the assets, liabilities and shareholders' rights, and the accounting disclosures for revenues and expenditures with the possibility of generalizing them on all audit activities carried out in any economic unit.