Auditing 101 | Part 2: Risk Assessment, Assertions, and Materiality | Maxwell CPA Review

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Published 2022-07-31

This video unpacks the crucial concept of risk assessment in auditing, explaining how it guides auditors to focus on high-risk areas and ensure financial statement accuracy. We explore the audit risk formula, different risk assessments, types of audit tests, management assertions, and how materiality helps determine significant errors for financial statement users. This video is valuable for accounting students, aspiring auditors, and anyone interested in financial statement accuracy.

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Video Chapters:
0:00 – Why Do We Need Risk Assessment?
1:06 – Audit Risk Formula
5:18 – Assessing the Risk of Material Misstatement
6:29 – What are Substantive Procedures?
7:28 – Testing Internal Controls
8:25 – Management Assertions
11:15 – Materiality

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All Comments (6)

@faithateh6593 8 months ago

You're examples made it soo easy for me to understand. Thank you 🙏
@hassan-zz2wp 10 months ago

Well explained
@kenhamroaladdin9212 8 days ago

Nice metaphor with stakes 🥩and fries 🍟
@Noma372 2 months ago

Thank you for this video, it has really shined a bright light in my studies. Highly appreciated.🤝🙃
@connorbraun5670 11 months ago

This was a very helpful video! One question I have is if you have a high control risk, but a low inherent risk or vice versa what does that do to substantive testing? I have had a simulation on a situation like this and I don't understand what happens to substantive testing if the RMM offsets each other. I'm hoping you can help, thank you!