Towards a Multi-Criteria Approach to Corporate Auditing Risk Assessment in Brazilian Context
18 Pages Posted: 22 Feb 2008 Last revised: 8 Feb 2010
Date Written: February 20, 2008
Abstract
Audit risk assessment is concerned with establishing a confidence level for an engagement, thereby enhancing the detection of probable misstatement and in so doing assisting in the selection of approaches to be followed by the auditor to mitigate such risks. This study examines the existing audit risk evaluation models predominantly used by the Big-4 and the 2nd tier firms; and proposes a Corporate Auditing Risk Model using the Multi-Criteria approach. In order to support the said objective we draw the following premise; a) Risk evaluation process is sine qua non for a successful engagement management; and b) A risk evaluation model that includes all the features of business risk which takes as its basic foundation, inherent, internal controls, and detection risks would have covered key aspects of business risks that could emerge. Upon simulation of the model, results show that on one hand, audit partners would only accept audit services with a low service risk and on the other hand, audit proposals that conjugates significant and very significant ethical risk; moderate, significant and very significant moral risk; moderate, significant and very significant loss of earning risks; would be automatically refused.
Keywords: Corporate, Auditing, Risk Assessment, Multicriteria, Models, Analytic Hierarchy Process.
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