Identify at least five questions the auditor must investigate in order to being to obtain an understanding of the client.

Question

Quizplus · Accepted Answer

The Answer is Answers may vary. These are good example responses:
i) What are the company’s products? Who are the company’s customers? What are its markets?
ii) What is the company’s strategy for developing and maintaining a sustainable competitive advantage over its competition?
iii) What is the nature of the company’s operating cycle, i.e., how do they produce, market and deliver the product?
iv) What are the key processes and activities of the operating cycle?
v) What is the nature and composition of the company’s asset base and sources of financing?
vi) What is the nature of the company’s strategic relationships with outside organizations or companies?
vii) How sophisticated is the company’s information system(s) that is used to record the activities of each of the elements of the operating cycle?
viii) What is the company’s attitude and strategy for generating reliable accounting information?
ix) What financial reporting information needs to be generated and reported by the information system(s)?
x) What are the critical risks that the auditor should be aware of that reported information will not fairly present results?

Identify at Least Five Questions the Auditor Must Investigate in Order