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Relationships Among Components of Engagement Risk

Evren Dilek Sengur ()
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Evren Dilek Sengur: Istanbul University, Turkey

Annals of the University of Petrosani, Economics, 2012, vol. 12, issue 1, 292-304

Abstract: Accounting scandals exploded at the beginning of 2000s and the collapse of Arthur Andersen highlighted the importance of implementing engagement risk management strategies in audit firms. Engagement risk refers the overall risk associated with an audit engagement and it consists of three components: client's business risk, auditor's business risk, and audit risk. The main purpose of this study is to describe each components of engagement risk and explain relations among them. Additionally, the paper points out the importance of engagement risk management throughout the audit and demonstrates engagement risk management strategies at client acceptance/continuance, planning and completion of audit.

Keywords: engagement risk; audit risk; client’s business risk; auditor’s business risk; risk management (search for similar items in EconPapers)
JEL-codes: M40 M42 (search for similar items in EconPapers)
Date: 2012
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