Video transcript: Scoping and risk assessment

Deepti:

When I scope an audit, my objective is to identify the right risks, from the start - because that forms the basis of the entire audit. So I approach the audit with curiosity,  business understanding and focus.

So how do I do this? 

I focus on the key judgements that management is making - ‘what's on their agenda and what are the objectives of the owners whether it is listed, family led or private equity backed?’

Jagir:

I ask ‘what isn't there?’, ‘what can't we see’, ‘what could go wrong?’, ‘what’s changed?’ and ‘what's happening in the industry’ 

Kate:

I look at how the business operates, what the end-to-end process is and how money flows through the organisation

Deepti:

And things change - for example right now, many organisations are dealing with the impact of climate change and some are now mandated to disclose the related risk for the first time. I have to ask myself where that risk might come from and that can lead us into new areas.

Kate:

I get to understand the organisation through talking to the owners and management, asking them about their vision and looking at all the market conditions and industry trends. 

They might be planning an acquisition, a merger or an exit of some kind. We need to think through the impact.

I ask difficult questions. Challenging ourselves and the organisations we audit is part of our culture. It’s the right thing to do and the organisations we audit understand it’s a necessary part of the PwC audit.

Jagir:

We never make assumptions that one year's risk areas will follow the last. Even if we know the organisation really well, we need to stand back from it and carefully review its risks, objectives and goals. 

We determine which areas might present a higher risk of material misstatement, and which are in scope for testing.

Kate:

The team identifies which specialists and experts we might need to bring in to test those key areas.
For instance the Digital Audit team can advise which advanced technologies might help on this particular audit.  

Jagir:

By bringing together our full team at the start and identifying which account balances are in scope for testing, we are really clear on the information we need.  

This sets the audit off on the right footing and ensures there’s plenty of time to gather the information.

A quality audit depends on rigourous project management - we'll manage the flow of information, agree a timeline of work and plan every stage meticulously.

Kate:

I’m really proud of how my team tackles unfolding changes within organisations and the wider world. We’re encouraged to be innovative in our thinking and that means we have highly engaged and responsive teams.