71-81

• Vakalfotis, Nikolaos, K.

Statement of Auditing Standards (SAS) 300.1 defines that “the auditors should obtain an understanding of the accounting and internal control systems sufficient to plan the audit anddevelop an effective audit approach. The auditors should use professional judgement to assess audit risk and to design audit procedures to ensure it is reduced to an acceptably low level”. The primary way that auditors deal with risk in planning audit evidence is via the audit risk model. The purpose of this article is to provide an overview of this traditional audit tool. To this end, this paper has been divided into four main parts. First, some key definitions with respect to audit risk are set forth. The nature of the audit risk model is then explained and its limitations are subsequently identified. Finally, conclusions are drawn.

• Economics and Business

• Economics

Audit Risk Assessment, Audit Risk Model, Inherent Risk, Control Risk, Detection Risk

JEL Classification: H83, M42