Which auditing approach focuses on areas of higher risk?

The auditing approach that focuses on areas of higher risk is risk-based auditing. This methodology is designed to identify, assess, and address potential risks that may significantly impact an organization's operations, financial reporting, or compliance with laws and regulations. By concentrating efforts on higher-risk areas, auditors can allocate their resources more effectively, ensuring that they focus on what matters most for the organization’s integrity and success.

Risk-based auditing utilizes a systematic approach to evaluate risk factors and determine the scope of the audit based on those assessments. This strategic focus not only helps in detecting potential issues but also enhances the overall quality and efficiency of the audit process. It enables auditors to provide more relevant insights and recommendations, ultimately leading to stronger governance and internal controls within the organization.

In contrast, random sampling does not specifically target high-risk areas and instead selects samples with no regard for the inherent risk associated with them. A comprehensive review entails a thorough evaluation across all areas without the prioritization necessary for focusing on risks. Statistical auditing employs mathematical principles to assess the data but lacks the specific intent of honing in on risk factors. These methodologies differ fundamentally from the objective of risk-based auditing, which emphasizes aligning audit efforts with the areas that could pose the greatest threats to the organization.