This module defines the two levels at which risks of material misstatement (RMMs) are required to be assessed in the audit standards and provides an opportunity for participants to practice the evaluation and categorization of identified RMMs into the various types (financial statement level or assertion level risk, and further as significant risks or fraud risks). After a discussion of various audit responses and scenarios, participants will practice developing an appropriate response to all RMMs (financial statement level, assertion level, and significant fraud risk). The participants may utilize data and scenarios from their own clients during the extensive exercise focused on designing appropriate audit responses.