Risk Assessment in Annual Audit Planning: Importance, Objectives, and More

The Most Important Objective of Risk Assessment in Annual Audit Planning

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Which of the following is the MOST important objective of a risk assessment performed during the annual audit planning process?

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A. B. C. D.

A.

The MOST important objective of a risk assessment performed during the annual audit planning process is to identify key areas of focus. A risk assessment is a process used to identify, evaluate, and prioritize risks and to determine the likelihood and impact of those risks. The risk assessment helps an auditor to identify the areas of the organization that are most vulnerable to risk and the areas where resources need to be allocated to mitigate those risks.

By identifying key areas of focus, the auditor can develop an audit plan that is targeted at the most significant risks facing the organization. This ensures that the audit resources are being used in the most effective and efficient manner possible. The risk assessment is also used to determine the scope of the audit and the level of testing required.

While engaging management in the audit planning process is important, it is not the MOST important objective of the risk assessment. Engaging management is important to ensure that the audit plan is aligned with the organization's goals and objectives and that the audit is conducted in a way that is sensitive to the needs of the organization.

Assigning audit resources is also an important objective of the risk assessment, but it is not the MOST important. Assigning audit resources is important to ensure that the audit is conducted in a timely and efficient manner, and that the necessary skills and expertise are available to complete the audit effectively.

Eliminating areas with low residual risk is not the MOST important objective of the risk assessment. While it is important to consider areas of low residual risk, eliminating these areas from the audit plan may result in important risks being overlooked.

In summary, the MOST important objective of a risk assessment performed during the annual audit planning process is to identify key areas of focus to ensure that the audit resources are being used in the most effective and efficient manner possible.

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