Audit Myth Busters

CCH® ProSystem fx® Knowledge Coach vs. The Four Most Common Risk Assessment Violations

CCH® ProSystem fx® Knowledge Coach with its risk-based methodology thoroughly addresses each common risk assessment: 

1. Internal Control
   Knowledge Coach requires the auditor to scope the engagement based on materiality, significant risk, fraud risk, and nature of transactions. As part of this scoping exercise, Knowledge Coach also requires the auditor to identify the level of internal control understanding needed for each significant account, class of transactions, or disclosure based on these factors. This scoping is foundational to our methodology, and drives risk assessment and development of further audit procedures. If the auditor attempts to move forward in the engagement without scoping, he or she will receive diagnostics alerting them that this work needs to be done before proceeding. Additionally, Knowledge Coach provides the auditor with resources to understand the design and implementation of internal controls including performing effective walkthroughs, articulating “what can go wrong,” and identifying necessary controls over financial reporting.


2. Insufficient Risk Assessment
   Knowledge Coach is a risk-based methodology that directs the auditor to obtain a thorough understanding of the entity, its environment, and its internal controls giving him or her the information needed to truly identify the specific risks associated with the engagement. In addition, the auditor is prompted to consider and assess in every phase of the engagement and at the end of every workpaper whether the results of procedures performed have identified risks that need to be documented and linked to an appropriate response. Knowledge Coach then allows the auditor to add these risks quickly and easily from anywhere in the engagement.


3. No Linkage
   Knowledge Coach is designed to specifically link program steps to identified risks and to alert the auditor when this linkage has not been completed. This encourages the auditor to consider why he or she is performing a specific step and helps ensure that the auditor is doing an appropriate amount of audit work (i.e., not over/under auditing) in response to the risk assessment.


4. Improper Control Risk
   When the auditor assesses control risk at less than maximum and has indicated that he or she is not testing operating effectiveness of controls, Knowledge Coach provides a diagnostic alert to the auditor indicating a discrepancy in the audit plan. To clear the diagnostic, the auditor must either set control risk to maximum or test the operating effectiveness of controls. When the auditor chooses to test the operating effective of controls, Knowledge Coach prompts the auditor to consider whether the results of those tests continue to support a control risk assessment of less than maximum.

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