Which specific audit procedure is essential for addressing risks related to management override?

The examination of journal entries and unusual transactions is a critical procedure for addressing risks related to management override. Management override of controls refers to situations where management may bypass internal controls, potentially leading to financial statement misstatements. By analyzing journal entries and looking for unusual patterns or transactions, auditors can identify entries that may not have a valid business purpose or that deviate from typical accounting practices. This procedure helps highlight any suspicious activities or irregularities that might indicate manipulation of financial results.

Furthermore, this approach provides insight into how management is using its authority—particularly during periods of financial reporting—and can uncover any instances where controls may not have been adequately applied or adhered to. In the context of the audit, this procedure plays a vital role in assessing the integrity of the financial statements and ensuring compliance with generally accepted accounting principles.

Other options, while important in various contexts, do not directly target the specific risks posed by management override. For example, external confirmations and compliance assessments contribute to understanding the entity's financial position and adherence to laws, yet they do not focus on identifying potential bypasses of internal controls by management. Evaluating the governance structure may provide information about oversight processes, but it lacks the specific analytical insight that examining journal entries can give regarding management's actions.