Audit risks

In this lesson

1. 0:00 Audit risks with non-current assets
2. 0:13 Why PPE is material and prone to overstatement
3. 0:43 Components of the PPE balance sheet total
4. 1:12 Using audit assertions to design procedures
5. 1:47 Completeness assertion for non-current assets
6. 2:15 Rights and obligations of asset ownership
7. 2:37 Valuation and accuracy of asset amounts
8. 3:00 Existence assertion and disposal testing
9. 3:34 Intangible assets and recognition risks

About this lesson

This session covers the key audit assertions—completeness, rights and obligations, valuation, and existence—and shows you how to apply them when designing audit procedures for exam questions. Understanding these risks and how to test them is essential for the Audit and Assurance module, where you'll need to write specific audit procedures that target the material misstatement risks in financial statements. The video focuses on PPE as a material balance that requires comprehensive testing across its components: opening balances, additions, revaluations, impairments, depreciation, and disposals. You'll see how to use audit assertions as a framework to identify what you're trying to prove with each test, turning broad questions about completeness and valuation into targeted audit procedures. The session also highlights why intangible assets present a higher audit risk due to their lack of physical substance and the common risk of overstatement when companies incorrectly capitalise research and development expenditure as development assets rather than recognising them as expenses.

Duration: 4m