One of the first steps that should be performed for a review of a nonpublic entity's financial statements is to
A) read the financial statements.
B) obtain knowledge of the accounting principles and practices of the client's industry.
C) inquire whether management has omitted substantially all of the disclosures required by applicable accounting standards.
D) apply analytical procedures to provide limited assurance that no material modifications should be made to the financial statements.

Question

Quizplus · Accepted Answer

Obtaining knowledge of the accounting principles and practices of the client's industry is necessary to understand the specific accounting issues that may affect the financial statements. This knowledge will also help the auditor identify potential errors or misstatements in the financial statements. Reading the financial statements is also important but should be done only after understanding the relevant accounting principles and practices. Inquiring about omitted disclosures and applying analytical procedures are later steps in the audit process.

One of the First Steps That Should Be Performed for a Review