The primary objective of an external auditor's obtaining an understanding of a client's internal control is to provide the auditor with which of the following?
A) Evidential matter to use in reducing detection risk.
B) Knowledge necessary to plan the audit and related testing.
C) A basis from which to modify tests of controls.
D) Information necessary to prepare flowcharts.

Question

Quizplus · Accepted Answer

The primary objective of obtaining an understanding of a client's internal control is to gain the knowledge necessary to plan the audit and related testing. This knowledge includes understanding the nature of the client's business, the accounting system and related control procedures, and any risk factors that may affect the audit. This information helps the auditor to design effective audit procedures to address the identified risks and to evaluate the internal control system's effectiveness. It also helps the auditor to identify areas that may require more extensive substantive testing.

The Primary Objective of an External Auditor's Obtaining an Understanding