Auditing model risk management

The audit risk model indicates the type of evidence that needs to be collected for each transaction class, disclosure, and account balance

It is best determined during the planning stage and only possesses little value in terms of evaluating audit performance

The Federal Reserve and the Office of the Comptroller of the Currency (OCC) define model risk as the occurrence of fundamental errors in model outputs and the incorrect use of models

These risks can arise in a company’s data, assumptions, methodologies, processes, or model results and how they are used