It is important to develop a good understanding of the audit client in order to _______.

Question

Quizplus · Accepted Answer

Developing a good understanding of the audit client is important for developing expectations regarding the client's financial statements. This includes understanding the industry and economic environment in which the client operates, the nature of the client's operations, and any significant accounting policies or transactions. This understanding helps the auditor assess inherent risk and determine the appropriate audit approach. It is not directly related to payment for fees or future employment by the client, and the goal is to reduce inherent risk rather than increase it.

It Is Important to Develop a Good Understanding of the Audit