Auditing – A Complex Science

The audit process employed by the Tasmanian Audit Office is highly sophisticated, and adaptable to a widely-varied range of government activities. The diagram illustrates the major factors that govern the three elements of the audit process, the Accountability Framework, Audit Client Assertions, and Audit Framework.

At the heart of the equation is the “Acceptable Audit Risk”. This is established by first analysing two inter-linked elements know as “Inherent Risk” and “Control Risk” as they apply to the organisation concerned. The Audit Office is then able to assess the level of “Audit Detection Risk”, which is crucial in determining the most appropriate procedures.

For example, if a government organisation operates in a high business risk environment and is not well managed, the acceptable Audit Detection Risk is low. If, on the other hand, an agency operates in a low risk business environment and is well run, the acceptable Audit Detection Risk is high.

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