Risk assessment is foremost a planning device whereby the focus of the audit work is brought to bear on the highest risk areas, however if risks are identified after planning is completed there is still provision to flag items as risks - but this will mean that planning must be revisited and perhaps revised.
Risks are flagged by clicking the yellow star at the right of items in the Trial Balance - individual accounts or sub-totals may be flagged.
Any work item comment may also be flagged.
Every flagged item will appear on page E4, Risk Analysis, Strategy and Plan - there it will require either a detailed analysis or a comment, depending on the seriousness and complexity of the risk - here we have a significant risk to analyse identified in the Trial Balance.
Data on lead schedules may be reduced to just flagged items by clicking the flag at the top of the table.
Say we have also identified the same risk in the review of the income system, which is also carried over to the E4, Risk Analysis, Strategy and Plan page - this could have been analysed separately, but instead has just been commented as relating to the other risk already identified.
Once a risk is identified and analysed it will attach to the Trial Balance line item wherever it is referenced, along with any other work done on the item say in the Analytical Review section.
Here on the G1 Lead Schedule all the risk assessment work is shown to prompt the auditor to carry out the specific testing:
Where risks are identified as high and significant they also carry through to the Z1 - Audit Summary Information page where the auditor must summarise the outcome of the response made to the risk.