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 In the broadest sense, a risk assessment study entails a review of a company’s operations in order to determine the financial and operational areas which present the greatest risk to the Company for fraud, errors and operational inefficiencies. Once identified, the independent auditor, under SAS 99 requirements, would adjust the scope of the audit examination to expand scopes and procedures into the areas of highest risk.
The amount of emphasis on defining, evaluating and testing for risk assessment, by auditors, varies significantly between CPA firms. Frequently, the degree of focus in many cases relates to the audit fees that can be charged and the comfort level that various auditing firms have with undertaking such assessments. Regardless of the extensiveness of such studies, their impact on audit fees has been significant, and not surprisingly Companies want more benefits from expanded procedures in order to justify the additional costs.
As a director it is reasonable to ask if such studies are now required, how can our Company maximize its benefits and can the study be undertaken independently of the audit process.
| With regard to maximizing the benefits of process, the following are the principal benefits to be obtained. |
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Strengthening internal and operational controls |
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Elimination of duplication of processing functions |
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Minimization of personnel requirements |
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Strengthened interaction between departments and between management and staff |
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Improved control over costs |
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Reducing the risk of fraud and/or deceptive business practices |
A comprehensive risk assessment study can be done as a project separate from the annual audit. Once completed, the independent auditor can limit SAS 99 procedures to reviewing and testing the study.
BrookWeiner L.L.C. has been undertaking such studies for both its audit clients and as stand-alone projects for non-audit clients. Our team of CPAs and CFEs (Certified Fraud Examiners) provide this service directly to family and mid-size businesses and also as sub-contractors of other CPA firms. Our team of experts can make the process both efficient and effective.
For additional information please contact Sherwin Brook or Sheldon Weiner.
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