Document background
The Audit Risk Assessment is a mandatory component of the audit planning process under South African auditing standards and International Standards on Auditing (ISA). It is required whenever an external audit is conducted, whether for listed companies under JSE requirements, private companies meeting audit thresholds under the Companies Act, or public sector entities under the Public Finance Management Act. The document comprehensively evaluates business risks, control environments, and fraud risks, forming the basis for determining audit strategy and resource allocation. Created at the beginning of an audit engagement, the Audit Risk Assessment must be regularly updated to reflect changes in risk factors and business circumstances. It serves as both a planning tool and documentation of the auditor's risk evaluation process, crucial for demonstrating compliance with South African regulatory requirements and professional standards.
