ASA 300 requires an auditor to gain a reasonable understanding of the client's:
A) business and industry.
B) industry but not business.
C) business but not industry.
D) specific entity structure but not its business or industry.

Question

Quizplus · Accepted Answer

ASA 300 requires auditors to gain a reasonable understanding of the client's business and industry. This includes understanding the nature of the client's operations, the economic environment in which it operates, and the various risks that may affect its financial statements. Understanding the client's industry is important in enabling the auditor to identify industry-specific risks that could impact the client's financial statements.

ASA 300 Requires an Auditor to Gain a Reasonable Understanding