The Risk Assessment tab is available in Cash Proof Advanced. It brings together the audit evidence generated during the Cash Proof and organizes it by audit area.
The workpaper helps engagement teams:
- Identify activity that has already been supported through the Cash Proof
- Find material noncash or unusual activity that may require additional work
- Build rollforwards for accounts receivable, fixed assets, debt, and equity
- Document how the results affect the nature, timing, and extent of planned procedures
The Risk Assessment is designed to be used with the engagement team’s other planning procedures, firm methodology, and professional judgment.
How the Risk Assessment is generated
Audit Sight uses the completed Cash Proof, general ledger, verified bank activity, chart of accounts mappings, and materiality entered for the engagement.
The workpaper is:
- Formula driven: Calculations are included in the workpaper and update when the underlying assumptions change.
- Deterministic: The same inputs and account mappings produce the same results each time the workpaper is generated.
- Traceable: Hyperlinks connect the Risk Assessment to the underlying accounts, journal entries, rollforwards, and transaction detail.
- Configurable: Teams can update account mappings, regenerate the workpaper, and adjust certain risk assessment assumptions.
The tab uses visual indicators to help teams identify areas that require attention. The engagement team should review the calculations and supporting detail before documenting its conclusion.
Revenue
The Revenue section presents revenue by month and links to the accounts included in the revenue balance.
Revenue cutoff
The cutoff analysis compares revenue recorded during a defined period at the end of the year with expected revenue based on the company’s daily activity.
The default risk period is 14 days. The team can adjust the period when appropriate. Audit Sight calculates:
- Expected revenue during the risk period
- Actual revenue recorded during the risk period
- The difference between expected and actual revenue
- Whether the difference exceeds the engagement’s materiality threshold
If the analysis indicates a potential cutoff risk, the workpaper includes a field for the team to document where the risk and related testing are addressed in the audit file.
Customer refunds
The Revenue section also identifies cash paid back to customers through revenue or accounts receivable. The analysis quantifies customer refunds so the team can determine whether the activity requires additional investigation.
Accounts receivable
The accounts receivable activity rollforward analyzes every entry posted to accounts receivable and separates the activity into:
- Credit sales
- Customer collections
- Credit memos and returns
- Unusual cash items
- Other activity
The unusual items are quantified and compared with performance materiality. Hyperlinks allow the team to review the transactions behind each amount.
This analysis can help the engagement team assess accounts receivable risk and determine the appropriate extent of confirmation and other receivables procedures under the firm’s methodology.
Property, plant and equipment
The Property, Plant and Equipment section presents monthly balances for asset cost and accumulated depreciation. It then builds separate analyses for asset cost and depreciation.
Fixed asset rollforward
The cost rollforward categorizes increases and decreases in fixed assets. Additions may include:
- Purchases supported by cash
- Purchases that moved through accounts payable
- Reclassifications between fixed asset accounts
- Transfers from construction in progress
- Noncash additions
- Other additions
Disposals are also quantified. The workpaper compares material noncash additions and disposals with performance materiality so the team can identify activity that may require additional testing.
Accumulated depreciation and depreciation expense
Audit Sight compares increases in accumulated depreciation with depreciation expense and identifies other activity in the accumulated depreciation accounts.
The depreciation analytic uses the prior-year depreciation rate and the current-year average fixed asset balance to calculate expected depreciation expense. The workpaper compares expected depreciation with actual depreciation and evaluates the difference against materiality.
Together, these analyses help the engagement team determine the procedures needed for fixed assets, disposals, accumulated depreciation, and depreciation expense.
Debt
The Debt section builds a rollforward of debt increases and decreases.
Debt activity is grouped into categories such as:
- Cash borrowings
- Cash repayments
- Reclassifications between debt accounts
- Interest and accrued interest
- Noncash activity
- Other activity
The workpaper also asks the team to document whether there were:
- New debt agreements
- Debt modifications
- Debt extinguishments
These questions help identify activity that may require agreement review or other debt procedures.
Interest expense analytic
Audit Sight calculates an implied interest rate using prior-year debt and interest expense. It applies that rate to the current-year average debt balance to estimate interest expense.
The workpaper compares estimated interest expense with actual interest expense and evaluates the difference against materiality.
The debt rollforward, agreement questions, and interest analytic give the team a documented basis for determining the procedures needed for debt and interest expense.
Equity
The Equity section uses a rollforward approach for increases and decreases in equity.
The workpaper:
- Separates retained earnings from other equity accounts
- Compares retained earnings activity with net income
- Identifies journal entries posted directly to retained earnings
- Separates cash and noncash equity contributions
- Separates cash and noncash distributions
- Quantifies noncash and unusual activity
Each amount links to the supporting activity. The workpaper compares identified items with performance materiality and provides space for the auditor’s conclusion.
How to review and document the results
Use the Risk Assessment tab after the Cash Proof has been completed and the chart of accounts mappings and materiality have been reviewed.
- Review the accounts included in each audit area.
- Review the top-level conclusions and materiality comparisons.
- Follow the hyperlinks to inspect material, unusual, noncash, or unmatched activity.
- Complete the questions and testing-reference fields included in the workpaper.
- Consider the results with the engagement’s other risk assessment procedures.
- Document the effect on planned audit procedures under the firm’s methodology.
The engagement team remains responsible for evaluating the evidence and documenting its audit conclusions.
Frequently asked questions
Is the Risk Assessment available now?
Yes. The Risk Assessment tab is available in Cash Proof Advanced.
Does the Risk Assessment update when assumptions change?
Yes. The workpaper uses formulas, so calculations and visual indicators update when supported assumptions or inputs change.
Can I change the revenue cutoff risk period?
Yes. The default risk period is 14 days, and the team can adjust it when appropriate for the engagement.
Can I trace the amounts to the supporting activity?
Yes. The workpaper includes hyperlinks to the related accounts, journal entries, rollforwards, and transaction detail.
Does the Risk Assessment determine which audit procedures should be eliminated?
The Risk Assessment organizes and quantifies the evidence generated during the Cash Proof. The engagement team evaluates that evidence with its other planning procedures and documents the procedures to be performed under the firm’s methodology.
Can Customer Success walk through the Risk Assessment with my team?
Yes. If you have an audit in progress, contact Audit Sight Customer Success. We can walk through the Risk Assessment tab using one of your current engagements.
