An auditor who accepts an audit engagement must gain an understanding of the client's industry and business. This includes knowledge of the:
A) business operations and processes.
B) industry and external environment.
C) management and governance.
D) all of the above

Question

Quizplus · Accepted Answer

An auditor must obtain an understanding of the client's industry and business. This should include knowledge of the client's business operations and processes, the industry in which it operates, and the external environment. Additionally, the auditor should have an understanding of the client's management and governance, as this can impact the risk of material misstatement in the financial statements. Therefore, option D, which includes all three areas, is the best choice.

An Auditor Who Accepts an Audit Engagement Must Gain an Understanding