Auditing Risk in Conditions of Economic Instability: New Approaches to Risk Assessment and Management
DOI:
https://doi.org/10.46793/Rev25112.101MKeywords:
audit risk, economic instability, financial reporting reliability, professional skepticism, internal controls, digital auditing tools, forensic procedures, risk assessment models, scenario analysis and macroeconomic shocksAbstract
Economic instability, characterized by inflationary pressures, market volatility, supply chain disruptions, and increased bankruptcy risks, significantly affects the reliability of financial reporting and elevates auditors’ exposure to various types of audit risk. The aim of this paper is to examine how contemporary auditors assess and manage audit risk under heightened economic uncertainty, as well as to identify new methodological approaches that enhance the quality of audit procedures. Special attention is given to the integration of advanced analytical techniques, data-driven risk assessment models, scenario analysis, and evaluations of organizational resilience to macroeconomic shocks. The paper also explores the role of internal controls, regulatory requirements, and professional skepticism in mitigating inherent, control, and detection risk. The research findings indicate that the application of digital tools, forensic procedures, and dynamic risk assessment models significantly contributes to more effective management of audit risk during periods of economic instability. The conclusion emphasizes the need for continuous development of auditing methodologies, improvement of professional competencies, and strengthening of the institutional framework in order to ensure a higher level of reliability in audit opinions under unstable economic conditions.
References
Allen, R. D., Hermanson, D. R., Kozloski, T. M., & Ramsay, R. J. (2006). Auditor risk assessment: Insights from the academic literature. Accounting Horizons, 20(2), 157–177.
Ganapathy, V. (2024). AI-based risk assessments in forensic auditing: Benefits, challenges and future implications. Shodh Sari–An International Multidisciplinary Journal, 3(04), 100–128.
Guthrie, J., Petty, R., Yongvanich, K., & Ricceri, F. (2004). Using content analysis as a research method to inquire into intellectual capital reporting. Journal of Intellectual Capital, 5(2), 282–293.
Joksimović, M. (2024). Mergers and acquisitions (M&A) caused by changes in financial markets. REVIZOR: Journal for Organizational Management, Finance and Auditing, 27(108), 223–234.
Joksimović, M., Beke Trivunac, J., & Šiljanoska, S. (2020). Money laundering as a modern global phenomenon of the 21st century. REVIZOR: Journal for Organizational Management, Finance and Auditing, 23(89–90), 75–81.
Ha, J. (2024). Firm sensitivity to changes in policy uncertainty and its impact on audit pricing. Review of Accounting and Finance, 23(4), 556–578.
Knechel, W. R. (2016). Audit quality and regulation. International Journal of Auditing, 20(3), 215–223.
Sapiri, M. (2024). A qualitative analysis on the role of auditors in preventing financial crises. Golden Ratio of Auditing Research, 4(2), 89–106.
Tarek, M., Mohamed, E. K., Hussain, M. M., & Basuony, M. A. (2017). The implication of information technology on the audit profession in developing country: Extent of use and perceived importance. International Journal of Accounting & Information Management, 25(2), 237–255.
Vento, G. A., & La Ganga, P. (2009). Bank liquidity risk management and supervision: Which lessons from recent market turmoil? Journal of Money, Investment and Banking, 10(10), 78–125.
