Audit risk assessment taking into account the principles of sustainable development for effective management of an enterprise
Year: 2025
Type: article
Abstract: Methods. The article analyzes various approaches to determining audit risk, with a focus on shortcomings and challenges arising from the integration of sustainable development principles. The following methods were employed: analysis – to examine factors influencing audit risk within the context of sustainable development and to develop a comprehensive risk assessment approach; comparison – to evaluate different audit risk assessment models; mathematical modeling – to quantify the relationships between audit risk, control risk, and detection risk; theoretical and methodological literature review – to provide a foundation for the study; synthesis – to outline ESG factors and specific indicators relevant to audit risk assessment. The object of the study is the evaluation of audit risk within the framework of sustainable development, emphasizing the integration of environmental, social, and economic aspects into the audit process to enhance enterprise management, sustainability, and competitiveness. The subject of the study encompasses methods and approaches to assessing audit risk while considering sustainable development principles, as well as their impact on managerial decision-making and the long-term stability of an enterprise. Results. It proposes a methodology for mathematically determining audit risk while incorporating these principles, based on the classical audit risk model, enables the integration of environmental, social, and governance (ESG) factors into overall risk assessment, thereby reducing the subjectivity of evaluations. Novelty. The study outlines and examines in detail the stages of assessing audit risk in the context of sustainable development, ensuring both quantitative and qualitative evaluation of ESG factors. Control measures aimed at mitigating the risk of material misstatement are identified based on information from accounting registers, accounting policy orders, primary documents, internal administrative records, responses to inquiries, and external sources. Additionally, the article proposes a framework for identifying and assessing the operational effectiveness of environmental control measures related to ESG factors, formatted as an auditor's working document. The study also establishes additional ESG factors that should be considered when selecting indicators for audit risk assessment. Practical value. The research consists in developing and testing a methodology for quantitative assessment of audit risk taking into account the principles of sustainable development, which allows integrating ESG factors (environmental, social and governance) into the traditional audit risk model, which contributes to reducing the subjectivity of assessments, increasing the accuracy of audit conclusions and forming effective management decisions. The results of the research can be used by practicing auditors, internal controllers and heads of enterprises to improve the internal control system taking into account sustainable development factors, which allows not only to strengthen confidence in financial reporting, but also to ensure long-term stability, operational efficiency and competitiveness of enterprises in the context of the requirements of international auditing standards.
Authors: N. L Shyshkova, A. A Makurin
Language: English
Subfield: Accounting
Domain: Social Sciences
Open Access status: bronze
OpenAlex ID: W4415165301
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