Prior year audit working papers may indicate misstatements likely to reoccur in the current year.

Question

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Prior year audit working papers can be used to identify areas with a higher risk of misstatement and provide insights into potential control weaknesses. This information can be helpful in planning the current year audit and focusing audit resources on high-risk areas. In addition, if there were material misstatements in the prior year financial statements, the auditor may need to consider the likelihood of those misstatements reoccurring in the current year and take appropriate measures to address them.

Prior Year Audit Working Papers May Indicate Misstatements Likely to Reoccur