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Integration with Workpapers CS

Step 1 – Identify Risk

After you create an engagement, the first step in completing the engagement is identifying risks. You identify risks while answering questions in the planning forms you select from the
Navigation
 pane.
As you complete the planning forms, you can add to the engagement any risks that could result in material misstatement of the financial statements.
To add identified risks:
  1. Click the
    Add Risk
     button in the
    Identified Risks
     pane on the right.
    The Identified Risk window appears.
  2. Enter information about the identified risk, including any audit areas affected by the risk.
  3. Click
    Next
    .
  4. On the
    Assertions for Identified Risks
     window, select any assertions affected by the risk for each audit area.
    note
    If using
    PPC’s Guide to PCAOB Audits
    , the assertions presented come from section
    AU 326 PCAOB
     interim auditing standards rather than from
    SAS No. 106, Audit Evidence
    .
    Users who have enabled
    SMART Practice Aids – Internal Control
     for the engagement will see an additional option below the assertions list asking if you want to indicate transaction classes affected by the risk.
  5. Select
    Yes
     or
    No
    .
    If you select
    Yes
    , the
    Finish
     button is replaced by a
    Next
     button.
  6. Click
    Next
    .
  7. On the
    Transaction Classes for Identified Risks
     window, select the related transaction classes from the list.
    note
    If needed, you can add transaction classes to this list using the
    Significant Transaction Classes
     form listed under
    Control Activities
     in the
    Internal Control
     area of the navigation pane.
  8. Click
    Finish
     when you complete your transaction classes selections.
    The risks you identified appear in the
    Identified Risks
     area in the right-hand pane.
    A symbol appears next to any risk for which you opted not to select the transaction classes affected by the risk.
    These risks also will be indicated in the
    Diagnostics Report
     which is generated by selecting
    Generation
     from the
    Navigation
     pane drop-down list.
    note
    For older titles, the
    Planning Form
     and
    Diagnostics Report
     generation functionality is accessed from Step 4 in the
    Navigation
     pane.
  9. When you have completed all step 1 planning forms, you are ready to go to Step 2 of the risk assessment process.
To edit or delete an existing risk:
You can edit or delete existing risks within each planning form by highlighting the risk in the
Identified Risk
 pane and then clicking the
Edit Risk
 or
Delete
 button.
To insert or delete rows in planning forms:
In the table areas of planning forms, you can add and delete rows by right-clicking inside a table field and selecting
Insert Row
 or
Delete Row
 from the right-click menu.
To view factors to consider:
Each planning form contains guidance and additional factors for you to consider in the completion of the form. This information is shown in blue text.
To complete the form:
Significant risks require a specific audit response and generally relate to non-routine transactions and complex or judgmental matters. When you identify risks, your audit program will include extended, substantive procedures for the assertions affected by the risk.
Click
Next
 when you are ready to move to the next form, or you can select a form from the
Navigation
 pane.
When you have completed all planning forms, you are ready to continue to Step 2, where you will assess the effects of risk.

This article applies to:

  • Product: SMART Practice Aids