Significant risks
Financial Dictionary — Auditing
Definition
Risks that require special audit consideration due to their nature or likelihood.
Detailed Explanation
Significant risks are risks that require special audit consideration due to their nature, complexity, or likelihood of material misstatement.
Common Uses
- Used in audit planning to understand risks and design procedures.
- Used during testing (controls/substantive) and documentation of audit evidence and conclusions.
- Used during testing (controls/substantive) and documentation of audit evidence and conclusions.
Practical Example
- Example: The auditor references **Significant risks** when designing procedures and documenting conclusions in the audit file.
Why This Term Matters
- Why it matters: Supports high-quality, defensible audit conclusions and helps detect material misstatements and control weaknesses.