We always hear the word â€œRiskâ€ in theÂ auditÂ atmosphere these days. Risk has become so important in audit parlance that we have specialized in â€œrisk auditâ€ training now. There are also auditors who have obtained special training onÂ risk audit.
Risk audit is defined as the uncertainty of an event occurring that could have an impact on the achievement of the entityâ€™s objectives. Risk has been classified in many ways and there are different ways of classifying and grading risks. We should also bear in mind the fact that risk can be controlled only and not eliminated.
Inherent Risk Audit
There are inherent risks associated with any company which arises due to the lack of controls. Residual risk is defined as the risk that remains even after the controls are established in place. Fraud risk is the risk that arises due to the possible commitment of fraud by the staff members.