1. Risk i. What are the components of audit risk? ii. In expounding on audit risk ISA 315 Identifying and Assessing the Risks of Material Misstatement Through Understanding the Entity and its Environment. Based on this standard therefore explain the objective of the auditor in relation to risk. iii. How is the auditor able to understand the entity and its environment and why is this necessary for the auditor in the conduct of his work? ISA 450 Evaluation of Misstatements Identified During the Audit. i. What is a misstatement and how does an auditor identify a misstatement? ii. A misstatement arises in two ways. Explain and state the two ways in which a misstatement arises. iii. What procedures has an auditor to perform to ISA 315 requires auditors to perform the following procedures to understand the entity and its environment: iv. Professional scepticism is critical to the auditor's work. Why is it important for the auditor to understand the need for professional scepticism? V. Professional judgement augments professional scepticism. What is professional judgement and how is it attained? vi. Define what risk analysis is and why it is important for an auditor to conduct risk analysis