Assess financial statement risks

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Use 590 Risk assessment to assess the inherent risk (IR), control risk (CR) and risk of material misstatements (RMM) at the financial statement level. IR is automatically calculated based on your selections of Likelihood of Misstatement Occurring (LMO) and Magnitude of Potential Misstatement (MPM) and the CR. RMM is automatically calculated based on IR and CR assessments. RMM drives the visibility of procedures in the Risk response phase.

The example below shows the Inventories section of 590 Risk assessment.

The Inventories section of the Risk assessment document showing the properties of the Slow moving inventory risk.

Note that AV is selected for Slow moving inventory. Available assertion types include:

  • C—Completeness

  • E—Existence

  • AV—Accuracy and Valuation

  • P—Presentation