The primary objective of procedures performed to obtain an understanding of the entity and its environment is to provide an auditor with:

Question

Quizplus · Accepted Answer

Choice "A" is correct. The auditor should obtain an understanding of the entity and its environment sufficient to assess the risk of material misstatement and to design and perform further audit procedures. Choice "B" is incorrect. Assessing inherent risk is not the primary objective of obtaining an understanding of the entity and its environment. Choice "C" is incorrect. Obtaining an understanding of the entity and its environment is not a sufficient basis for issuing an audit opinion. Choice "D" is incorrect. Procedures performed to gain an understanding of the entity and its environment would not ordinarily test the consistency of the application of management's policies. If the auditor intends to rely on a control, its consistency in application would then be tested.

The Primary Objective of Procedures Performed to Obtain an Understanding