Final answer:
The audit profession has responded to audit failures by enhancing audit quality, strengthening audit standards, and improving risk assessment procedures to better identify and manage risks.
Step-by-step explanation:
The audit profession has taken several steps to respond to audit failures in regard to risk management. Initiatives such as enhancing audit quality, strengthening audit standards, and improving risk assessment procedures have been at the forefront of these responses.
For example, there is now a greater emphasis on understanding the business environment of a company, the focus has increased on areas with a higher risk of material misstatement, and there is enhanced scrutiny over the use of technology in audits.
Auditors are also required to have ongoing professional education to stay updated with the latest industry practices, which leads to better risk identification and management strategies. Furthermore, regulatory bodies have tightened their oversight roles, with stiffer penalties for audit firms and individual auditors who fail to meet the required standards. These measures are aimed at restoring trust and integrity in the financial reporting process.