Audit scope refers to the parameters that delineate the boundaries, timeframe, and specific areas of examination that auditors will direct their procedures towards for the purpose of assessing conformance, controls, or the validity of assertions being made.
Factors Determining Audit Scope
- Regulatory requirements, inherent risks, and materiality thresholds guide scope priorities from year to year
- Entities, locations, processes, systems, charts of accounts, and transactions composing the audit universe are identified
- Preliminary analytical procedures and risk assessments refine the scope by focusing procedures on higher risk issues
- Scope varies by engagement yet remains sufficiently broad to draw reasonable conclusions
Example of Audit Scope
For a digital coin exchange client, auditors expanded investigative procedures to also examine new crypto asset listings and exchange-facilitated OTC trades due to heightened regulatory compliance risks tied to the expanding business lines.
Key Takeaways
Well-defined audit scopes ensure relevant subject matters receive appropriate attention per professional standards while conserving resources by bypassing lower priority areas, ultimately allowing auditors to address critical assurance demands.