INTERNATIONAL JOURNAL OF ARTIFICIAL INTELLIGENCE
ISSN: 2692-5206, Impact Factor: 12,23
American Academic publishers, volume 05, issue 02,2025
Journal:
https://www.academicpublishers.org/journals/index.php/ijai
page 1353
AUDIT RISKS AND THEIR ASSESSMENT IN THE MODERN ECONOMY
Yuldasheva Saodat Khalmurzaevna
PhD and associate professor at International School of
Finance Technology and Science, department of “Accounting”
Abstract:
The article discusses the issues of determining and assessing audit risk, analyzes
Russian and foreign experience in applying international auditing standards in terms of risk
assessment and risk identification, taking into account the company's internal control system.
Keywords:
audit, audit risk, non-detection risk, control risk, inherent risk, internal control system.
Introduction
Harmonization and unification of principles and rules of accounting and reporting in the modern
economy at the supranational level presupposes, accordingly, the creation of unified fundamental
approaches to auditing such reporting and confirming its reliability. The company's reporting,
regardless of country and industry affiliation, compiled on the basis of international financial
reporting standards, must be verified on the basis of international auditing standards.
Methodological framework of the study
This article used general scientific research methods, such as the method of system analysis,
synthesis, the method of comparisons and analogies, as well as formal logical methods, the
transition from the general to the particular.
Audit risks and their assessment in the modern economy
The most important element in planning a company audit is the definition and assessment of
audit risk. Standardization in the field of definition and assessment of audit risk is very important,
since a single approach to assessing audit risk excludes the possibility of its arbitrary
interpretation. In this regard, the content of International Standard on Auditing 200 includes not
only the general goals and responsibilities of an independent auditor, as well as the nature and
scope of the audit, but also discloses the concept of risk. Since the purpose of the audit is to
express an opinion on the reliability of the reporting of the audited company, then the expression
of such an opinion is associated with a certain risk [6].
Audit risk is intended to assess the risk of occurrence of the fact when the auditor may express
an erroneous opinion that the financial statements of the audited company are reliable. The fact
of expressing an erroneous opinion of the auditor on the financial statements as a whole may
arise as a result of determining the risk of material misstatement of the financial statements and
the risk of not detecting errors and misstatements in the financial statements as a whole.
Audit risk is defined as (1):
Ra — audit risk;
Рн — inherent risk;
Рк — control risk;
Рн — risk of not detecting an error.
Control risk is caused by the possibility of failure to detect significant errors in reporting by the
company's internal control system. Detection risk is caused by the probability of failure to detect
significant errors made by the company's internal control system by the auditor.
Let's look at an example of calculating potential audit risk.
INTERNATIONAL JOURNAL OF ARTIFICIAL INTELLIGENCE
ISSN: 2692-5206, Impact Factor: 12,23
American Academic publishers, volume 05, issue 02,2025
Journal:
https://www.academicpublishers.org/journals/index.php/ijai
page 1354
According to the survey conducted at the preliminary stage, the auditor found that the inherent
risk in the audited company is quite high and equals 65%, the control risk is 30%.
Based on testing the current internal control system in the audited company, the auditor
estimated the risk of not detecting an error at 10%.
Using the audit risk formula, we determine the audit risk as a whole for the audited company:
0,65 * 0,30 * 0,10 = 0,0195 * 100% = 1,95% (2)
Thus, the value of audit risk was less than 2% overall, which is quite acceptable and even low.
The average empirically obtained assessment of acceptable audit risk is about 5%.
International Auditing Standard 315 defines the auditor's responsibility in terms of assessing the
risks of distortions in financial statements that may be material. The provisions of the standard
contain recommendations for understanding the specifics of the audited organization's activities,
including the organization's internal control [5].
Risks during the audit are presented as business risks and risks of insufficient internal control.
Internal control procedures are carried out by the company's management to achieve the set goals
of further development, reliability of financial statements and compliance with the requirements
of legislative and regulatory documents. The auditor assesses significant risks based on possible
actions:
— inquiries to management and other persons,
— analytical procedures,
— observation,
— inspection.
The procedures included in the internal control system must be adopted and fixed by the order of
the management of the audited entity. These include:
— conducting inventories of material and monetary resources,
— employee accountability,
— competent organization of financial liability,
— reconciliation of internal accounting and tax data with external data,
— reconciliation of synthetic and analytical accounting data,
— rational organization of storage of stocks and warehousing,
— compliance with settlement and payment discipline,
— ensuring the security and safety of financial information,
— compliance with the accounting and tax policies of the organization.
In the audit risk formula, the risk of material misstatement of information can be assessed both
for the reporting as a whole and for the prerequisites for its formation, such as assessment,
classification, etc.
For example, the risk of material misstatement of the reporting may be caused by the following
reasons: bankruptcy of the parent or subsidiary organization, as well as individual major
shareholders; the nature of the activities of the audited entity, such as the possibility of technical
obsolescence of its products and services, the complexity of the capital structure, the importance
and number of affiliated persons; factors affecting the industry to which the audited entity
belongs, such as competitive conditions in the industry, financial trends and average indicators
for the industry, etc.
Let's look at an example of calculating the risk of non-detection.
In the process of familiarization with the accounting organization and internal control procedures
of the company during preliminary planning, the auditor assessed the inherent risk as very high
at 90%, and the control risk as average at 60%. The audit risk as a whole was 6%, which exceeds
INTERNATIONAL JOURNAL OF ARTIFICIAL INTELLIGENCE
ISSN: 2692-5206, Impact Factor: 12,23
American Academic publishers, volume 05, issue 02,2025
Journal:
https://www.academicpublishers.org/journals/index.php/ijai
page 1355
the accepted level of audit risk in practice (5%). It is necessary to determine the risk of non-
detection in this situation.
Рн=0.06 / (0.9 * 0.6) = 0.111 or 11.1% (3)
It turns out that the risk of non-detection or the expected ineffectiveness of audit procedures is
over 11%, which is quite a high figure due to the presence of a high inherent risk.
The information base of audit risk in the company should include: current accounting and tax
accounting systems, an internal control system, an electronic document management system,
including the creation and storage of electronic documents, as well as a well-established system
for submitting tax and accounting reports to tax authorities.
As for the main areas of identifying audit risk, they should include the following areas of the
company's activity:
- financial and economic activities of the company as a whole, while the auditor's special
attention should be directed to checking the amount of innovations and investments, the
consequences of the company's reorganization, existing tax benefits, changes in the tax burden in
the current period, as well as the presence of uncovered losses;
— reflection of transactions in tax accounting, including an audit check of possible inaccuracies
in the calculation of tax indicators, incorrect attribution of income and expenses to reporting
periods, incorrect classification of fixed assets and intangible assets and the procedure for
conducting and reflecting in the reporting the results of revaluation of non-current assets;
— formation of primary accounting documents, while the auditor must check for the presence of
fictitious accounting documents, the absence of primary accounting documents or the presence
of unreliable primary accounting documents;
— automation of accounting and reporting, when the auditor checks for the presence of data
entry on fictitious facts, incomplete reflection of data in the automated system, as well as
incorrect reflection of data;
— formation of registers of accounting and tax accounting and reporting, while the main areas of
verification are the identification of incomplete data, incorrect and incorrect data, incorrect and
incomplete completion of reports and explanations thereto;
— the procedure for paying taxes, including checking for facts of underpayment of taxes and the
presence of tax arrears, checking the deadlines for paying taxes and insurance premiums to state
extra-budgetary funds, as well as the correct execution of tax documents, including tax
notifications.
Conclusion
As a result of the audit risk analysis, it appears that the most promising type in the development
of audit is risk-based audit. An audit can be performed without duplicating arrays of accounting
and tax accounting information, but selectively, based on the most problematic issues of
checking accounting data and reporting, based on the information base of audit risk and the main
directions of its identification.
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INTERNATIONAL JOURNAL OF ARTIFICIAL INTELLIGENCE
ISSN: 2692-5206, Impact Factor: 12,23
American Academic publishers, volume 05, issue 02,2025
Journal:
https://www.academicpublishers.org/journals/index.php/ijai
page 1356
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ISSN: 2692-5206, Impact Factor: 12,23
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