AICPA Audit Guides are developed and updated with the assistance of industry experts to provide guidance and discussions about specific auditing topics. The Audit Guide Assessing and Responding to Audit Risk in a Financial Statement Audit provides practical information, guidance, practice aids, and illustrative examples for the application of the risk assessment standards including: a plain-english overview of the risk assessment process; diagrams and examples to illustrate key points; a discussion of internal control and how it impacts your risk assessment; step-by-step guidance through the risk assessment procedure; a case study illustrating audit documentation developed in a risk assessment; helpful observations and practice tips throughout. Updated as of March1, 2012, the guide includes relevant guidance contained in applicable standards and other technical sources. This guide provides authoritative and comprehensive guidance on the risk-based audit process that is required on all financial statement audits. The core principles of this audit methodology include: Understanding the client’s business; Evaluating internal control; Assessing risk; Designing and performing tests of controls and substantive tests that are linked to assessed risks; Evaluating audit findings, including control deficiencies identified during the audit. The guide has been updated to reflect the issuance of the Clarity SAS No. 122, Statements on Auditing Standards: Clarification and Recodification. All content is reviewed by subject matter experts and the appropriate AICPA senior committee(s). A subject index has been added to the Guide for ease of use