Acquiring Knowledge of Business and Assessing Risk
Auditing procedures typically require the auditor to acquire knowledge of the entity being audited and to prepare a risk-based audit plan. The audit team needs to collect knowledge of business with a focus on risks to the achievement of efficiency and the identification of significant areas that would benefit from an examination of efficiency.
As in all performance (value-for-money) audits, the auditor’s understanding of significance and risks will be used to identify particular programs or areas to include in the audit and to develop audit objectives. This section of the Practice Guide is designed to help auditors acquire a sound understanding of significance (financial magnitude, socio-economic importance, current interest in the matter, etc.) and risks by providing them with:
- examples of audit questions to explore under each of the general management activities that support efficiency in public sector organizations;
- indicators that efficiency may be at risk in a program or organization; and
- information on efficiency constraints that may exist in public sector organizations and programs.