In what order should the following steps occur?
A. assess client business risk
B. understand the client's business and industry
C. perform preliminary analytical procedures
D. assess acceptable audit risk
A) D, B, C, A
B) B, A, D, C
C) B, D, A, C
D) D, C, B, A

Question

Quizplus · Accepted Answer

Understanding the client's business and industry should occur before assessing client business risk and assessing acceptable audit risk, as knowledge of the client's business and industry is necessary to properly assess these risks. Performing preliminary analytical procedures can occur after understanding the client's business and industry but before assessing client business risk. Therefore, the correct order is B, A, D, C.

In What Order Should the Following Steps Occur