when conducting an audit, and determining misstatements given a relevant assertion ...

There is always the risk of a payroll cycle that fictitious employees are receiving paychecks. Or that a purchasing agent is receiving a kickback from suppliers. Therefore, when conducting an audit, and determining misstatements given a relevant assertion, know whether you need to decrease or increase the risk accordingly. 

As a reminder:

• Control risk is the risk that a misstatement that could occur in a relevant assertion
• That could be material, either individually or when aggregated with other misstatements
• Which would not be prevented or detected on a timely basis by the entity’s internal control

Note some examples of assertions in relation to these accounts: 

• If you are trying to understand the completeness of AR, you may want to trace sales invoice and shipping docs to customer account transactions, this way you are answering are the balances containing all transactions for the period. 
• If you are trying to understand the valuation and allocation of inventory, you may want to invoices from suppliers, that way you are answering is inventory valued applicably to the framework.
• If you are trying to understand cash and its existence, you will want to agree cash balances per bank recs to the year end bank statement, as is is answering "does it even exist".
• If you are trying to understand a fixed asset's rights/obligations, vouch the acquisition to purchase invoices to answer, "is this asset owned by whom is claiming it". 
• If you are trying to understand the completeness of AP, you will want to examine invoices paid to the subsidiary ledger to test, "are the balances of payables containing all transactions". 

​cc: Audit