Application of Risk-Based Audit Approach by Sole Practitioners and Local Audit Firms: Towards Fully-Compliant Financial Reports

Abstract : The study examined the factors influencing the implementation of the Risk-Based Audit Approach (RBAA). Key variables identified were auditor capability, availability of audit professionals, integration of information technology, job pressure on auditors, competitiveness of audit firms, and audit fees. The respondents included sole practitioners and employed auditors in local audit firms. The research used a quantitative method, employing structured questionnaires to capture respondents’ perceptions. The findings revealed that auditor capability is the most critical factor in applying RBAA. For effective implementation, auditors need industry-specific experience, sufficient training hours, balanced staffing leverage, investment in IT and productivity tools, compliance with firm regulations, and a good ratio of audit hours to risk areas and audit phases. Skilled auditors are more adept at identifying and addressing potential issues. Future research could explore factors affecting auditor capability and the availability of audit professionals.