Explain the risk assessment to be done for audits.

As per CSAS-2 para 2, Risk assessment of the Auditee with respect to and connected/relevant to the Audit Engagement shall be done considering industrial & business environment, organizational structure and compliance requirements. The industrial & business environment includes the regulatory changes & judicial orders, compliance and disclosure requirements, etc. The Auditor shall evaluate high risk areas and activities of the Auditee relating to: Internal control systems and processes of the Auditee for adherence to the constitutional documents, applicable laws, act, rules, regulations and standards; Transparency, prudence and probity; and Changes or Attrition in the compliance team and frequency of such changes and attrition. The Auditor shall endeavor to make assessment of risk and shall identify critical and high risk areas; the risk assessment by Auditor can be made: By considering the underlying risk assessed by Management or internal and/or specific expert/agencies and analysis thereof; By reviewing policies and procedures put in place to mitigate risk; By having insight into the objectives, key performance indicators, risks and control measures, holding meetings with key executives of the Auditee.