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Main Elements of fhe Methodology for Inspecting Financial Stałemenłs

Every financial statement contains inaccuracies that can be the result of error (unintentional action) or fraud (intentional action). In the course inspecting a financial report, a certified audi tor makes use of what he judges to be the level of generał and partial materiality when making a judgment about any inaccuracies that are discovered. This article outlines the procedures for judging levels of materiality.

In the course inspecting a financial report, a certified auditor also estimates the level of audit risk, which consists of inherent risk, control risk and detection risk. The first two are specific to a given company and are measured by the certified auditor, but the auditor can only influence the level of audit risk by choosing an appropriate level of detection risk. The article presents the various components of audit risk and the process of measuring such risk.