Are audit program plans risk-adjusted?

Prior archival and experimental studies provide conflicting results regardi ng the extent to which audit program plans are responsive to client risks, as prescribed by the Audit Risk Model. The purpose of this study is to corr oborate and extend archival research on this issue by considering a broader set of client risks and incorporating a number of methodological improveme nts. Data were gathered on risk assessments and evidential plans in the acc ounts receivable area from the working papers of 74 randomly selected manuf acturing clients (42 general manufacturing and 32 high-technology manufactu ring). The results indicate a statistical association between the level of and cha nges in a limited number of assessed client risks (e.g., management aggress iveness and the inherent risk of an existence misstatement) and evidential plans. In addition, audit programs were found to change little over time wi th many tests done across a broad array of engagements. Overall, the respon siveness of evidential plans to risks, although limited, was found to be gr eater in the present study than prior research. These results, which genera lly replicate prior research, indicate the tack of a strong relationship be tween client risks and audit programs and thus raise a number of important questions for audit theory, practice and training.