[{"data":1,"prerenderedAt":-1},["ShallowReactive",2],{"detail-sidebar-cat-1-en-105":3,"doc-seo-162235-105":53,"doc-detail-162235-en":126},{"code":4,"msg":5,"data":6},0,"success",[7,14,19,24,29,34,39,44,49],{"id":8,"doc_module":9,"doc_module_name":10,"category_name":11,"show_sort_weight":12,"slug":13},11,1,"Template","Presentations",90,"presentations",{"id":15,"doc_module":9,"doc_module_name":10,"category_name":16,"show_sort_weight":17,"slug":18},12,"Resumes",80,"resumes",{"id":20,"doc_module":9,"doc_module_name":10,"category_name":21,"show_sort_weight":22,"slug":23},14,"Invoices",70,"invoices",{"id":25,"doc_module":9,"doc_module_name":10,"category_name":26,"show_sort_weight":27,"slug":28},15,"Posters",60,"posters",{"id":30,"doc_module":9,"doc_module_name":10,"category_name":31,"show_sort_weight":32,"slug":33},16,"Social Media",50,"social-media",{"id":35,"doc_module":9,"doc_module_name":10,"category_name":36,"show_sort_weight":37,"slug":38},17,"Forms",40,"forms",{"id":40,"doc_module":9,"doc_module_name":10,"category_name":41,"show_sort_weight":42,"slug":43},18,"Letters",30,"letters",{"id":45,"doc_module":9,"doc_module_name":10,"category_name":46,"show_sort_weight":47,"slug":48},21,"Paper Templates",5,"papers-templates",{"id":50,"doc_module":9,"doc_module_name":10,"category_name":51,"show_sort_weight":4,"slug":52},158,"General","general-158",{"code":4,"msg":54,"data":55},"ok",{"site_id":56,"language":57,"slug":58,"title":59,"keywords":60,"description":61,"schema_data":62,"social_meta":119,"head_meta":121,"extra_data":123,"updated_unix":125},105,"en","risk-analysis-for-financial-statements-tool-1-example","Risk Analysis for Financial Statements - Tool 1 example","","A risk analysis framework guides how to evaluate each financial statement line item and its accompanying disclosures, supporting resource prioritisation and ensuring controls reduce the risk of material misstatement to an acceptable level. It distinguishes high-risk areas that demand sustained effort, complex internal controls, stronger documentation, and judgement or estimation from low-risk areas requiring routine controls. The framework includes formal risk assessment governance, standardised analysis per account, defined objectives, risk identification and rating, and residual risk assessment through preventative pre month-end and detective post month-end control practices.",{"@graph":63,"@context":118},[64,80,101],{"@type":65,"itemListElement":66},"BreadcrumbList",[67,71,74,77],{"item":68,"name":69,"@type":70,"position":9},"https://docshare.wps.com","Home","ListItem",{"item":72,"name":10,"@type":70,"position":73},"https://docshare.wps.com/template/",2,{"item":75,"name":11,"@type":70,"position":76},"https://docshare.wps.com/template/presentations/",3,{"item":78,"name":59,"@type":70,"position":79},"https://docshare.wps.com/template/risk-analysis-for-financial-statements-tool-1-example/162235/",4,{"url":78,"name":59,"@type":81,"image":82,"author":87,"headline":59,"publisher":90,"fileFormat":93,"inLanguage":57,"description":61,"dateModified":94,"datePublished":95,"encodingFormat":93,"isAccessibleForFree":96,"interactionStatistic":97},"DigitalDocument",{"url":83,"@type":84,"width":85,"height":86},"https://docshare.wps.com/thumbnails/risk-analysis-for-financial-statements-tool-1-example/162235.png","ImageObject",442,249,{"name":88,"@type":89},"Dozel","Person",{"url":68,"name":91,"@type":92},"DocShare","Organization","application/vnd.openxmlformats-officedocument.wordprocessingml.document","2026-09-20","2026-08-30",true,{"@type":98,"interactionType":99,"userInteractionCount":76},"InteractionCounter",{"@type":100},"ViewAction",{"@type":102,"mainEntity":103},"FAQPage",[104,110,114],{"name":105,"@type":106,"acceptedAnswer":107},"What is the purpose of a risk analysis framework for financial statements?","Question",{"text":108,"@type":109},"It establishes what analysis is required for each line item and related notes to prioritise resources and verify that sufficient controls exist to mitigate the risk of material misstatement to an acceptable level.","Answer",{"name":111,"@type":106,"acceptedAnswer":112},"How does the document recommend assessing financial reporting risk?",{"text":113,"@type":109},"Management should define objectives, identify risks tied to accounts and assertions, consider quantitative and qualitative risk factors, apply weightings, and assign risk ratings using the entity’s risk management framework.",{"name":115,"@type":106,"acceptedAnswer":116},"What is included in residual risk assessment?",{"text":117,"@type":109},"It evaluates preventative and detective control effectiveness for each financial statement assertion and considers existing mitigating controls designed to prevent or detect potential misstatements, errors, and fraud in a timely manner.","https://schema.org",{"og:url":78,"og:type":120,"og:title":59,"og:site_name":91,"og:description":61},"article",{"robots":122,"canonical":78},"index,follow",{"doc_id":124,"site_id":56},162235,1788120955,{"code":4,"msg":5,"data":127},{"doc_id":124,"user_id":128,"nickname":88,"user_avatar":129,"doc_module":9,"category_id":8,"category_name":11,"doc_title":59,"doc_description":61,"doc_content":130,"file_id":131,"file_url":132,"file_type":133,"file_size":134,"view_count":76,"is_deleted":4,"is_public":9,"is_downloadable":9,"audit_status":9,"page_count":135,"language":136,"language_code":57,"site_id":56,"html_lang":57,"table_of_contents":137,"faqs":138,"seo_title":139,"seo_description":61,"update_tm":125,"read_time":76},962085662650,"https://ap-avatar.wpscdn.com/davatar_29158cc5080c5b710cf443261637dec0","Tool 1 example: Risk analysis for financial statements\nPurpose\nA risk analysis framework establishes the analysis required for each financial statement line item and accompanying notes to:\nassist in the prioritisation of resources\nto determine if sufficient controls are in place to mitigate the risk of material misstatement to an acceptable level, to achieve necessary outcomes.\nFor example, a high-level financial reporting risk, will require ongoing and sustained resource requirement and likely to involve complex internal control, higher level of documentation and disclosure, and accounting issues or balances that require estimation or judgement. A low level of financial reporting risk will require minimal resource commitment and likely to involve routine control and accounting issues.\nRisk management practices and processes\nThe entity should adopt best practices that formalise a policy for the risk assessment, based on a number of factors, including the complexity of the statements and the maturity of the process. The process should include:\na regular cycle for reviewing financial statement line item risks\nreporting to governance committees\na standard format, detailed analysis and information against each account.\nRisk assessment steps\nStep 1: Specifying objectives\nA pre-condition to the conduct of risk assessment is establishing objectives. Entity management should specify high-level objectives and sub-objectives relating to the preparation of financial statements.\nAn example of a high-level objective is for the entity to prepare reliable financial statements that are in accordance with AAS and TIs/LG Regs.\nSub-objectives relate to account and business processes and activities and include accounting policies, financial statement assertions and qualitative characteristics.\nExamples of sub-objectives include:\nProperty, plant and equipment held and recorded as of year-end meet the classification and valuation financial statement assertions.\nStep 2: Conduct financial reporting risk assessment\nIn identifying risks to the achievement of financial reporting objectives noted in Step 1, management should consider the financial reporting risk factors related to each financial statement account and the associated financial statement assertions. Each entity should decide on the financial reporting risk factors most appropriate to its own operations and circumstances and the weightings to be applied to each factor.\nThe process of identifying and analysing risk factors includes both quantitative and qualitative factors. Examples of factors that can impact financial reporting risk include materiality, volume of transactions, operating environment, the level of judgement involved, reliance on third party data, manual intervention, disparity of data sources, evidence of fraud, system changes and results of previous audits by internal audit and the OAG.\nApply risk ratings to determine overall financial reporting risk assessment based on entity’s risk management framework.\nAn example risk analysis for the item property, plant and equipment is below. The example serves as an illustration only and does not cover all financial statements items.\nNote 1: Different weightings should be given to each risk factor. The materiality of the financial statement item would be expected to have the greatest weighting\nStep 3: Conduct a residual risk assessment\nAn effective system of internal control helps prevent material misstatements, errors and fraud. Key controls must be designed and implemented in such a way that they will prevent or detect on a timely basis, potential material misstatements related to the identified financial statement assertions.\nA residual risk assessment for each financial statement assertion should take into account the preventative and detective control framework and identification of other existing mitigating controls.\n(i) Preventative controls: Pre month-end assurance framework\nThe entity should adopt best practices that control s","cbCaidmd2bVJ2XOT","https://ap.wps.com/l/cbCaidmd2bVJ2XOT","docx",49255,7,"English","# Purpose\n## Risk management practices and processes\n## Risk assessment steps\n### Step 1: Specifying objectives\n### Step 2: Conduct financial reporting risk assessment\n### Step 3: Conduct a residual risk assessment\n# Preventative controls: Pre month-end assurance framework\n# Detective controls: Post month-end assurance framework","[{\"question\":\"What is the purpose of a risk analysis framework for financial statements?\",\"answer\":\"It establishes what analysis is required for each line item and related notes to prioritise resources and verify that sufficient controls exist to mitigate the risk of material misstatement to an acceptable level.\"},{\"question\":\"How does the document recommend assessing financial reporting risk?\",\"answer\":\"Management should define objectives, identify risks tied to accounts and assertions, consider quantitative and qualitative risk factors, apply weightings, and assign risk ratings using the entity’s risk management framework.\"},{\"question\":\"What is included in residual risk assessment?\",\"answer\":\"It evaluates preventative and detective control effectiveness for each financial statement assertion and considers existing mitigating controls designed to prevent or detect potential misstatements, errors, and fraud in a timely manner.\"}]","Risk Analysis for Financial Statements - Tool 1 example | DOCX"]