Application of financial statement assertions in the process of detecting and assessing audit risk

In the context of the unstable economic development the requirements applied to reliability of financial reporting are growing steadily. From an auditor''s perspective it means that the problem of minimizing audit risk, which can be solved both at the level of financial reporting and the level of its assertions, is becoming more vital. The article provides an overview of different approaches to understanding such definitions as «risk of essential misstatement of financial reporting» and «financial statement assertions», which are presented in regulatory and economic literature. As a result, various aspects referring to the research into the methodological problem concerning application of financial statement assertions in auditing in association with the methodological problem of studying essential misstatements risks are summarized, the necessity for such research is explained. The analysis of international and Russian auditing standards has revealed stable interrelation of auditing procedures, risk of essential misstatement and financial statement assertions. Substantial and complex approaches to the development and use of auditing procedures presuppose research on essential misstatement risk both at the level of financial statement and its assertions. Significant aspects of detecting and assessing essential misstatement risk are recommended to be considered at the level of financial statement assertions regardless of the stage of auditing. Beside that, correspondence between the issues of audit risk reduction and value of financial statement assertions in detecting and assessing audit risk is established. The interrelationships described in the article are implemented in the practice of auditing organizations in the process of development of audit documentation set for the various stages of auditing. It allows for structuring the process of planning and performing auditing procedures and minimizing audit risk basing on the requirements of the international auditing standards.