The Third Edition of this successful text includes extensive changes, based on feedback from students and lecturers. There is a discussion of auditing and the law beyond the issue of third-party liability; and more coverage of recent developments in audit methodologies and techniques. New chapters include a survey of developments in audit automation, a discussion of the nature and development of the audit market, both in the United Kingdom and the European Union, and an assessment of the impact on auditing of the Cadbury Report on corporate governance, with particular attention to the role of audit committees. Each chapter includes questions for discussion.

Audit Risk and Sampling

Audit Risk and Sampling

Audit risk and sampling


The word risk seems omnipresent in all aspects of commercial life in the 1990s. It would appear that no discussion of financial matters would be complete without a discussion of the risks involved. It has reached the stage where Turley (1989, p. 113) notes that it has become a ‘buzz word’, an important signifier of modernity. It is thus no surprise that the term should now be an accepted part of discourse in auditing.

Audit risk is defined in SAS 300: Accounting and Internal Control Systems and Audit Risk Assessments (APB, 1995a, para. 3) as the risk of the auditor giving ‘an inappropriate audit opinion on financial statements’. Although defined in terms of giving an inappropriate opinion, audit risk ...

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