Investigating the Role of Risk-Based Auditing in Enhancing Financial Statement Reliability and Credibility

Posted: Nov 16, 2023

• Daniel Moore
• Daniel Sanchez
• David Taylor

Abstract

The contemporary financial landscape is characterized by unprecedented complexity, volatility, and interconnectedness, presenting significant challenges for traditional auditing methodologies. Risk-based auditing has emerged as a critical paradigm shift in addressing these challenges, moving beyond compliance-focused approaches to embrace proactive risk identification and mitigation strategies. This research investigates the transformative potential of advanced risk-based auditing frameworks in enhancing both the reliability and credibility of financial statements. The increasing frequency of financial scandals and corporate failures has underscored the limitations of conventional auditing practices, particularly in detecting sophisticated fraud schemes and addressing emerging risks in digital business environments. Our study addresses this critical gap by developing and empirically testing an innovative risk-based auditing framework that integrates cutting-edge technological tools with established auditing principles.