Some Empirical Evidence about the Assessment of Audit Risk in Practice.

Abstract The purpose of this paper is to investigate empirically the application to actual practice of the audit risk models outlined in SAS No. 39, SAS No. 47 and the Canadian Institute of Chartered Accountants (CICA) study, "Extent of Audit Testing." Risk assessments for accounts receivable were solicited from a sample of audit managers. The auditors were asked to assess the audit risk for accounts receivable for an actual audit engagement and to decompose the risk assessment into the components discussed in SAS No. 39 and SAS No. 47. This information was then analyzed to determine how these several components were combined to assess audit risk. Analysis indicated that the auditors did not combine the components of audit risk in the manner suggested by any of the authoritative models.