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B7 Risk Assessment

The Risk Assessment is arguably one of the most important workpapers in any audit, including Self Managed Super Funds. The MyWorkpaper SMSF 5.1 B7 Risk Assessment has been designed to provide you with an efficient and compliant risk assessment for completing your SMSF audits. Key to this is the use of our Risk Library, which is embedded in the application.

Before we dive into how to use the B7 Risk Assessment, some background as to how the workpaper is structured at a high level. The B7 Risk Assessment is broken down into four key areas, being:

  1. Control Risk;

  2. Financial Statements Risks;

  3. Compliance Risks; and

  4. Overall Risk Assessment.

We will now cover each of these areas in detail below.

 

Control Risk

Under the Auditing Standards we are required to consider the control environment for every engagement, including SMSF audit. However, given the limited segregation of duties of most, if not all SMSFs, ordinarily you as the auditor will determine that the risk of the control environment is high and that the controls should not be relied upon for the SMSF audit.

Accordingly, in SMSF 5.1 we have included a specific control risk section at the top of the B7 Risk Assessment which provides you with a standard response to adequately document your consideration of the control risk for the audit. It is recommended that you read through this for each audit and amend the standard text to reflect the differences which may exist for the specific audit. Further, if you wish to change this default text on a global level for all of your audits, we recommend that you create a firm based template using the Templates functionality in MyWorkpapers to provide consistency and the ability to edit the standard text globally. For further details on how to create your own firm based template, please visit the Templates help topic or talk to one of the friendly MyWorkpapers staff.

Financial Statements Risks

The Financial Statements Risks section of the B7 Risk Assessment includes all of important features and information you will need for completing your risk assessment. The below picture provides you with a snapshot as to the key information which is displayed on the Financial Statements Risks area.

Now that you have a high level understanding as to how the Financial Statements Risk area to complete you very own assessment complete the following:

  1. Ensure you have imported the trial balance and have then accessed the B7 Risk Assessment;

  2. Click Full Screen to display the Financial Statements Risks in full screen mode (Hint: Press escape on your keyboard to exit full screen mode);

  3. For each lead schedule or financial statements area which you want to record a risk, however your mouse over the Risks column until the two Add blank risk and Add risk from library buttons appear;

  4. Select Add risk from library;

  5. On the pop up menu, from the left hand side select the financial statement area which the risk relates to;

  6. From the library risk on right, select the risk which applies to the fund;

  7. Back on the main Financial Risk Assessment screen, if required edit the risk, assertions at risk and the audit approach by simply typing in the areas provided;

  8. Using the dropdown menu, set the Risk of material misstatement as either Significant, High, Medium or Low;

  9. Repeat the above for all of the identified risks of the fund;

  10. If at any point you need to delete a risk added, simply;

    1. Hover your mouse over the risk until the red delete icon appears on the right hand of the screen;

    2. Click on the delete icon;

    3. Click OK on the pop up warning;

  11. If desired, tick the Display only significant risks tick box at the top of the screen to;

  12. Press Escape on your keyboard to exit from full screen mode.

 

 

Compliance Risks

The Compliance Risks section of the B7 Risk Assessment operates in a very similar way to the Financial Statements Risks section, however as it is a compliance based risk assessment the main difference will be that lead schedules and quantitative materiality measures are not included.

To complete the Compliance Risk assessment:

  1. Ensure you are inside the B7 Risk Assessment and have scrolled down to the Compliance Risks section;

  2. For each identified compliance risk, click on the Add risk from library button;

  3. On the pop up men, from the left hand side select the compliance area which the risk relates to;

  4. From the library of risks on the right, select the risk which applies to the fund;

  5. Back on the main Compliance Risks screen, if required edit the risk, SISA reference and the audit approach by simply typing in the areas provided;

  6. Using the dropdown menu, set the Risk of material misstatement as either Significant, High, Medium or Low;

  7. Repeat the above for all of the identified risks of the fund;

  8. If at any point you need to delete a risk added, simply;

    1. Hover your mouse over the risk until the red delete icon appears on the right hand of the screen;

    2. Click on the delete icon;

    3. Click OK on the pop up warning.

 

Overall Risk Assessment

Once you have complete the three separate risk assessments (Control Risk, Financial Statement Risks and Compliance Risks) you are then ready to conclude on the overall risk assessment of the Fund and define your overall audit approach.

To do this, simply:

  1. Ensure you are inside the B7 Risk Assessment and have scrolled down to the Overall Risk Assessment section;

  2. For each question, click on the Select dropdown option on the right hand of the screen;

  3. Select the most appropriate response from the dropdown options provided;

  4. If you want to change the section made;

    1. Hover over the response until the red delete icon appears;

    2. Click on the delete icon;

    3. Repeat the above process to enter your response.

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